2014 Cost of living survey

Newsroom

Australia becomes more attractive for expats & global companies: Mercer Cost of Living Survey

  • 10 July 2014
  • Australia , Sydney
  • Sydney drops from 9 (2013) to 26 in 2014 Mercer Cost of Living survey

  • Luanda in Angola is the world’s most expensive city for the second year in a row

  • Melbourne drops from 16 to 33, Brisbane and Canberra fall outside top 50
     

Sydney, currently ranked Australia’s most expensive city for expatriates, has dropped a huge seventeen places from nine to twenty-six in Mercer’s 2014 Cost of Living Survey.

Other Australian cities have also witnessed some of the most dramatic falls in the ranking this year. Melbourne (33) dropped seventeen places while Perth (37) fell nineteen spots. Brisbane (52) and Canberra (53) dropped outside the top fifty after having both previously been inside the top thirty. Adelaide (59) has also fallen twenty five spots from its 2013 ranking.

Garry Adams, Leader of Mercer’s Talent Business, Pacific said, “The results of our latest Cost of Living Index are promising for companies considering establishing headquarters in Australia or relocating expats.”

“The drop in rankings mean Australia becomes more attractive for global talent because ex-pats’ dollars will go further, it does not mean that Australian cities have become cheaper for Australians.

“Changes in the value of the Australian dollar against the US dollar are the primary reasons for the drop in our rankings,” said Mr Adams.

The strengthening of the Chinese yuan and currencies in Western Europe against the US dollar has also seen countries in these regions become more expensive, and drive Australian and New Zealand cities down the list.

“We know Australian cities are already a very attractive location for corporates due to our high quality of living, multicultural and multi-lingual workforce and Asian region time zone.  The drop in costs means they become even more attractive as a location for global assignments. Companies will find it easier to justify using one of the major Australian cities as a headquarter for their Asia Pacific operations,” said Mr Adams.

“Compared to last year, where Sydney sat within the top 10 most expensive cities globally, we were looking at ensuring salaries adequately reflected the difference in cost of living to an employee’s home country in order to attract and retain talent. Now, we’re provided with a lot more flexibility in setting salaries and attracting employees from the global talent pool, knowing the expat dollar will go a lot further here,” he said.

Mercer's authoritative survey is one of the world’s most comprehensive, and is designed to help multinational companies and governments determine compensation allowances for their expatriate employees. New York is used as the base city, and all cities are compared against it. Currency movements are measured against the US dollar.

The survey covers 211 cities across five continents and measures the comparative cost of over 200 items in each location, including housing, transportation, food, clothing, household goods, and entertainment.

“Rankings in many regions were affected by recent world events, including economic and political upheavals, which resulted in currency fluctuations, cost inflation for goods and services, and volatility in accommodation prices,” said Ed Hannibal, Partner and Global Leader for Mercer’s Mobility practice.

“While Luanda and N’Djamena are relatively inexpensive cities, they are quite costly for expatriates since imported goods come at a premium. In addition, finding secure living accommodations that meet the standards of expatriates can be challenging and quite costly as well. This is generally why some African cities rank high in our survey,” said Mr Hannibal.

Other cities appearing in the top 10 of Mercer’s costliest cities for expatriates are Bern, Moscow, and Shanghai. Karachi, ranked 211, is the world’s least expensive city for expatriates, and the survey found that Luanda is more than three times as costly as Karachi.

According to Mr. Hannibal, “While multinationals continue to recognise the importance of having a global workforce and corporate assignments remain prevalent, they must be able to monitor and balance the cost of their expatriate programs. Employers need to evaluate the impact of currency fluctuations, inflation, and political instability when sending employees on overseas assignments while ensuring they retain talented employees by offering competitive compensation packages.”

Currency fluctuations and the impact of inflation on goods and services have influenced the cost of expatriate programs as well as the city rankings.

 Nathalie Constantin-Métral, Principal at Mercer with responsibility for compiling the survey ranking, said, “Interestingly, several cities jumped up the list this year following large increases in both accommodation cost and demand, coupled with strong local currencies. Dhaka and Nairobi (both 117) and Dubai (67) soared thirty seven, thirty and twenty-three spots, respectively.”

The Americas

Cities in the United States have climbed in the ranking due to the relative stability of the US dollar against other major currencies, in addition to the significant drop of cities in other regions which resulted in US cities being pushed up the list. A rise in the rental accommodation market pushed New York up 8 places to rank 16, the highest-ranked city in the region. Los Angeles (62) climbed 10 places from last year while San Francisco (74) jumped eighteen places. Among other major US cities, Honolulu (97) is up twenty places, Miami (98), is up sixteen places, and Boston (109) is up fourteen spots. Cleveland (167) and Winston Salem, North Carolina (182) remain the least expensive surveyed cities for expatriates.

Mr. Hannibal added, “Even though we saw US cities rise in the rankings this year due in part to the strength of the US dollar, it’s important to note that relative costs shift with currency volatility, making overseas assignment costs sometimes greater and sometimes smaller.”

In South America, São Paolo (49) ranked as the costliest city, followed by Rio de Janeiro (65).

Yet, both cities dropped thirty and thirty-six positions, respectively, as a result of the Brazilian real weakening against the US dollar despite increases in rental prices. Buenos Aires also dropped significantly this year to rank 86, following the devaluation of its currency, and despite a strong price increase for goods and services. Other cities in South America that fell on the list of costliest cities for expatriates were Santiago, Chile, dropping twenty-five places to rank 88 and Bogota, falling thirty-eight places to rank 98. Managua, Nicaragua (207) is the least expensive city in South America.

As explained, the exchange rate has a major impact on a city ranking. This year Mercer left Caracas out of the ranking due to the multiple, complex exchange rate situation; its ranking would have varied greatly depending on the official exchange rate selected.

Canadian cities dropped in this year’s ranking with the country’s highest-ranked city, Vancouver, falling thirty-two places to rank 96. Toronto (101) dropped thirty-three spots, while Montreal (123) fell twenty-eight spots. Calgary’s ranking dropped to rank 125. “The Canadian dollar weakened significantly against the US dollar, which accounts for the major slips we saw in this year’s ranking,” explained Mr. Hannibal.

Europe, the Middle East, and Africa

Four European cities remain in the top 10 list of most expensive cities. Zurich (5) is the most costly European city on the list, followed by Geneva (6) and Bern (8). Switzerland remains one of the most expensive locations for expatriates following the slight strengthening of the Swiss franc against the US dollar. Moscow (9) and St. Petersburg (35) dropped seven and twelve spots, respectively, due to a dramatic depreciation of the ruble against the US dollar.

Overall, Western European cities have all risen in the rankings mainly due to the strengthening of local currencies against the US dollar. In particular, cities in the United Kingdom and Germany experienced some of this year’s biggest surges in the ranking, with Glasgow (108) rising forty-nine places from 2013, while Aberdeen (94) and Birmingham (90) jumped thirty-four and forty-five spots, respectively. Munich (55) rose twenty-six places from last year, Frankfurt (59) jumped twenty-four spots, and Berlin (68) soared thirty-one places from its previous ranking.  Dusseldorf and Hamburg also rose significantly.

Other cities that jumped in the ranking include Paris (27), up ten places from last year, Milan (30), up eleven spots, Rome (31), up thirteen and Vienna (32) up sixteen spots.

Ms. Constantin-Métral explained, “Despite moderate price increases in most of the European cities, European currencies for the most part slightly strengthened against the US dollar, which pushed most Western European cities up in the ranking. There have been some increases in accommodation costs, due to strong demand for rentals, which has also been behind upward movement in rankings for some European cities – most notably Copenhagen, Amsterdam, and Frankfurt.”

Most cities in Eastern and Central Europe, however, fell in the ranking as a result of local currencies depreciating against the US dollar. Prague (92), Almaty (111), and Minsk (191) fell nineteen, sixteen, and four spots, respectively, despite there being stable accommodations in these locations.

Tel Aviv (18) continues to be the most expensive city in the Middle East for expatriates, followed by Beirut (63), Dubai (67), and Abu Dhabi (68). Jeddah, Saudi Arabia, (175) continues to rank as the least expensive city in the region. “Several cities in the Middle East experienced a jump in the ranking, as they are being pushed up by other locations’ decline, as well as the strong increase for expatriate rental accommodation costs, particularly in Abu Dhabi and Dubai,” said Ms. Constantin-Métral.

Quite a few African cities continue to rank high in the 2014 survey, reflecting high living costs and prices of goods for expatriate employees. Luanda (1) remains the most expensive city for expatriates across Africa and globally, and Ndjamena follows in second place. Victoria, Seychelles (13) is the next costliest city in Africa followed by Libreville, Gabon (19). In South Africa, Cape Town (205) fell eight places in the ranking, reflecting the weakening the South African rand has suffered against the US dollar.

Asia Pacific

Four of the top 10 cities in this year’s ranking are in Asia. The most expensive city, Hong Kong (3), jumped three places from last year. Singapore (4) is the next most expensive city in the region, gaining one position from last year, followed by Tokyo, which ranked 7 dropping four places this year. Jumping four spots since last year, Shanghai (10) is the next Asian city on the list, followed by Beijing (11), Seoul (14), and Shenzhen (17).

 “Japanese cities have dropped in the ranking this year as a result of the yen’s weakening against the US dollar,” said Ms. Constantin-Métral. “However, Chinese cities jumped in the ranking, including Shanghai, Beijing, and Shenzhen, due to the strengthening of the Chinese yuan.”

Mumbai (140) is India’s most expensive city, followed by New Delhi (157) and Chennai (185). Bangalore (196) and Kolkata (205) are the least expensive Indian cities ranked. Elsewhere in Asia, Bangkok (88) dropped twenty-two places from last year. Kuala Lumpur, Malaysia, ranks 115, followed by Indonesia’s Jakarta which ranked 119, falling forty-eight places from 2013. Hanoi jumped three spots to rank 131. Karachi, Pakistan (211) remains the region’s least expensive city for expatriates.

Mercer produces individual cost of living and rental accommodation cost reports for each city surveyed. For more information on city rankings, visit www.mercer.com/col. To purchase copies of individual city reports, visit www.imercer.com/col or call Client Services in Warsaw on +48 22 434 5383.

Notes for editors

 Important: The list of rankings is provided to journalists for reference, and should not be published in full. The top ten and bottom ten cities in either list may be reproduced in a table.

The figures for Mercer’s cost of living and rental accommodation costs comparisons are derived from a survey conducted in March 2014. Exchange rates from that time and Mercer’s international basket of goods and services have been used as base measurements.

Governments and major companies use data from this survey to protect the purchasing power of their employees when transferred abroad; rental accommodation costs data is used to assess local expatriate housing allowances. The choice of cities surveyed is based on the demand for data.

Mercer also provides advice and market data on international and expatriate compensation management, and works with multinational companies and governments worldwide. It maintains one of the most comprehensive databases on international assignment policies, compensation practices, and data on worldwide cost of living, housing, and hardship allowances. Its annual global mobility conferences and other events provide companies with the latest trends and research on mobility issues. Visit www.imercer.com/mobility for details. Follow Mercer’s mobility news on Twitter @MercerMobility.

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Mercer Cost of Living Survey – Worldwide Rankings 2014

(The Mercer international basket, including rental accommodation costs)
Rank as of March
 

2013

2014

City

Country

1

1

Luanda

Angola

4

2

N'Djamena

Chad

6

3

Hong Kong

Hong Kong

5

4

Singapore

Singapore

8

5

Zurich

Switzerland

7

6

Geneva

Switzerland

3

7

Tokyo

Japan

9

8

Bern

Switzerland

2

9

Moscow

Russia

14

10

Shanghai

China

15

11

Beijing

China

25

12

London

United Kingdom

22

13

Victoria

Seychelles

13

14

Seoul

South Korea

17

15

Copenhagen

Denmark

24

16

New York City

United States

29

17

Shenzhen

China

32

18

Tel Aviv

Israel

21

19

Libreville

Gabon

33

20

Kinshasa

Congo, Democratic Republic of

11

20

Oslo

Norway

45

22

Nouméa

New Caledonia

12

23

Osaka

Japan

35

24

Guangzhou

China

36

25

Lagos

Nigeria

9

26

Sydney

Australia

37

27

Paris

France

40

28

Brazzaville

Congo, Republic of

39

29

Bamako

Mali

41

30

Milan

Italy

44

31

Rome

Italy

48

32

Vienna

Austria

16

33

Melbourne

Australia

46

34

Conakry

Guinea

23

35

St. Petersburg

Russia

49

36

Abuja

Nigeria

18

37

Perth

Australia

42

38

Stockholm

Sweden

52

39

Amsterdam

Netherlands

51

40

Dakar

Senegal

26

40

Nagoya

Japan

55

42

Helsinki

Finland

38

43

Abidjan

Cote d'Ivoire

46

44

Douala

Cameroon

55

44

Yaoundé

Cameroon

57

46

Baku

Azerbaijan

69

47

Nanjing

China

65

48

Qingdao

China

19

49

Sao Paulo

Brazil

67

50

Tianjin

China

61

51

Dublin

Ireland

28

52

Brisbane

Australia

27

53

Canberra

Australia

79

54

Shenyang

China

81

55

Munich

Germany

69

56

Brussels

Belgium

77

56

Luxembourg

Luxembourg

54

58

Auckland

New Zealand

34

59

Adelaide

Australia

83

59

Frankfurt

Germany

62

61

Taipei

Taiwan

72

62

Los Angeles, CA

United States

76

63

Beirut

Lebanon

81

63

Madrid

Spain

29

65

Rio de Janeiro

Brazil

57

66

Yangon

Myanmar

90

67

Dubai

United Arab Emirates

79

68

Abu Dhabi

United Arab Emirates

99

68

Berlin

Germany

85

70

Pointe-a-Pitre

Guadeloupe

84

71

Barcelona

Spain

97

71

Chengdu

China

100

73

Dusseldorf

Germany

92

74

San Francisco, CA

United States

88

75

Riga

Latvia

106

76

Hamburg

Germany

53

77

Tehran*

Iran

90

78

Athens

Greece

103

79

Lyon

France

75

79

Wellington

New Zealand

78

81

Bandar Seri Begawan

Brunei

114

81

Port-au-Prince

Haiti

93

81

White Plains, NY

United States

93

84

Bratislava

Slovakia

101

85

Chicago, IL

United States

59

86

Buenos Aires

Argentina

102

87

Cotonou

Benin

66

88

Bangkok

Thailand

63

88

Santiago

Chile

135

90

Birmingham

United Kingdom

116

91

Stuttgart

Germany

73

92

Prague

Czech Republic

106

92

Washington, DC

United States

128

94

Aberdeen

United Kingdom

109

94

Lisbon

Portugal

64

96

Vancouver

Canada

117

97

Honolulu, HI

United States

60

98

Bogota

Colombia

103

98

Kiev

Ukraine

114

98

Miami, FL

United States

42

101

Djibouti

Djibouti

68

101

Toronto

Canada

89

103

Amman

Jordan

31

103

Niamey

Niger

113

105

Lomé

Togo

131

105

Ouagadougou

Burkina Faso

125

107

Casablanca

Morocco

157

108

Glasgow

United Kingdom

123

109

Boston, MA

United States

129

110

Tallinn

Estonia

95

111

Almaty

Kazakhstan

122

111

Riyadh

Saudi Arabia

127

113

Limassol

Cyprus

87

114

Montevideo

Uruguay

111

115

Kuala Lumpur

Malaysia

144

116

Ljubljana

Slovenia

154

117

Dhaka

Bangladesh

147

117

Nairobi

Kenya

71

119

Jakarta

Indonesia

158

120

Belfast

United Kingdom

131

120

Zagreb

Croatia

120

122

Maputo

Mozambique

95

123

Montreal

Canada

139

124

Algiers

Algeria

97

125

Calgary

Canada

135

125

Dallas, TX

United States

103

125

Manila

Philippines

110

128

Accra

Ghana

148

129

Nurnberg

Germany

139

130

Vilnius

Lithuania

134

131

Hanoi

Vietnam

144

132

Morristown, NJ

United States

126

132

San Jose

Costa Rica

106

134

Havana*

Cuba

130

135

Budapest

Hungary

141

135

Ho Chi Minh City

Vietnam

85

135

Istanbul

Turkey

112

135

Lima

Peru

143

139

San Juan

Puerto Rico

118

140

Mumbai

India

153

141

Leipzig

Germany

150

142

Warsaw

Poland

144

143

Houston, TX

United states

73

144

Brasilia

Brazil

151

145

Panama City

Panama

121

146

Kigali

Rwanda

151

147

Atlanta, GA

United States

141

147

Kuwait City

Kuwait

133

149

Port of Spain

Trinidad and Tobago

154

150

Manama

Bahrain

138

150

Mexico city

Mexico

118

152

Ottawa

Canada

154

153

Cairo

Egypt

163

153

Khartoum*

Sudan

159

153

Seattle, WA

United States

160

156

Minneapolis, MN

United States

124

157

New Delhi

India

162

158

Doha

Qatar

169

159

Bucharest

Romania

160

160

Detroit, MI

United States

163

161

St. Louis, MO

United states

168

162

Pittsburgh, PA

United states

170

163

Rabat

Morocco

167

164

Colombo

Sri Lanka

173

165

Port Louis

Mauritius

173

166

Portland, OR

United States

175

167

Cleveland, OH

United States

170

168

Muscat

Oman

177

169

Phnom Penh

Cambodia

176

170

Guatemala City

Guatemala

180

171

Damascus*

Syria

181

172

Sofia

Bulgaria

172

173

Santo Domingo

Dominican Republic

148

174

Lusaka

Zambia

182

175

Jeddah

Saudi Arabia

163

176

Asuncion

Paraguay

190

177

Quito

Ecuador

186

178

Dar es Salaam

Tanzania

163

178

Kingston

Jamaica

185

180

Tashkent

Uzbekistan

193

181

Harare

Zimbabwe

193

182

Winston-Salem, NC

United States

178

183

Monterrey

Mexico

192

184

Belgrade

Serbia

179

185

Chennai

India

182

186

Addis Ababa

Ethiopia

195

187

Yerevan

Armenia

199

188

Sarajevo

Bosnia and Herzegovina

202

189

Tirana

Albania

198

190

San Salvador

El Salvador

187

191

Minsk

Belarus

199

191

Nouakchott

Mauritania

203

193

Skopje

Macedonia

205

194

Kampala

Uganda

195

194

Tbilisi

Georgia

189

196

Bangalore

India

184

197

Gaborone

Botswana

201

198

Ashkhabad

Turkmenistan

190

199

Banjul

Gambia

204

200

Tegucigalpa

Honduras

209

201

Blantyre

Malawi

210

202

Tunis

Tunisia

187

203

Johannesburg

South Africa

211

204

La Paz

Bolivia

197

205

Cape Town

South Africa

206

205

Kolkata

India

212

207

Managua

Nicaragua

208

208

Islamabad

Pakistan

213

209

Bishkek

Kyrgyzstan

207

210

Windhoek

Namibia

214

211

Karachi

Pakistan


* US trade sanctions prevent Mercer from conducting local-pricing agent surveys. Prices have been estimated based on publicly available information, historic Mercer data, and/or Mercer economic research.

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