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Currency movements main factor in deciding
ranking of most expensive cities in the world

A report by Mercer Consulting

28 July 2008: Moscow is the world’s most expensive city for expatriates for the third consecutive year, according to the latest Cost of Living Survey from Mercer. Tokyo is in second position climbing two places since 2007, whereas London drops one place to rank third. Oslo climbs six places to 4th place and is followed by Seoul in 5th. Asunción in Paraguay is the least expensive city in the ranking for the sixth year running. With New York as the base city scoring 100 points, Moscow scores 142.4 and is close to three times costlier than Asunción which has an index of 52.5. Contrary to the trend observed last year, the gap between the world’s most and least expensive cities now seems to be widening.

THE MOST EXPENSIVE CITIES IN THE WORLD
ECA International survey (June 2008): Introduction | Table: World | Table: Europe | Table: Asia |
UBS survey (March 2008): Most expensive cities (Intro) | World's most expensive cities (table) | Richest cities by personal earnings (table) | Richest cities by purchasing power (table |
Mercer survey (July 2008): Most expensive cities
EIU survey (2007): Most expensive cities

RICHEST CITIES BY GDP
Introduction | 150 richest cities in 2005 | 150 richest cities in 2020 | Europe's richest cities |


The world's most expensive big cities
(The index is based on cost of living expressed in US dollars. Therefore, if the dollar weakens against the local currency of a city, the city becomes more expensive and moves up the index, even if prices expressed in local currency remain the same or even go down.)

Rank 2008
Rank 2007
City
Country
Score 2008
Score 2007
1
1
Moscow Russia
142.4
134.4
2
4
Tokyo Japan
127.0
122.1
3
2
London UK
125.0
126.3
4
10
Oslo Norway
118.3
105.8
5
3
Seoul South Korea
117.7
122.4
6
5
Hong Kong China
117.6
119.4
7
6
Copenhagen Denmark
117.2
110.2
8
7
Geneva Switzerland
115.8
109.8
9
9
Zurich Switzerland
112.7
107.6
10
11
Milan Italy
111.3
104.4
11
8
Osaka Japan
110.0
108.4
12
13
Paris France
109.4
101.4
13
14
Singapore Singapore
109.1
100.4
14
17
Tel Aviv Israel
105.0
97.7
15
21
Sydney Australia
104.1
94.9
16
16
Dublin Ireland
103.9
99.6
16
18
Rome Italy
103.9
97.6
18
12
St. Petersburg Russia
103.1
103.0
19
19
Vienna Austria
102.3
96.9
20
20
Beijing China
101.9
95.9
21
22
Helsinki Finland
101.1
93.3
22
15
New York City US
100.0
100.0
23
38
Istanbul Turkey
99.4
87.7
24
26
Shanghai China
98.3
92.1
25
25
Amsterdam Netherlands
97.0
92.2
25
29
Athens Greece
97.0
90.6
25
62
São Paulo Brazil
97.0
82.8
28
26
Madrid Spain
96.7
92.1
29
49
Prague Czech Rep.
96.0
85.6
30
37
Lagos Nigeria
95.9
88.0
31
31
Barcelona Spain
95.2
89.2
31
64
Rio de Janeiro Brazil
95.2
82.5
31
23
Stockholm Sweden
95.2
93.1
34
24
Douala Cameroon
95.1
92.9
35
67
Warsaw Poland
95.0
82.4
36
64
Melbourne Australia
94.2
82.5
37
39
Munich Germany
93.1
87.6
38
45
Berlin Germany
93.0
85.9
39
44
Brussels Belgium
92.9
86.5
40
40
Frankfurt Germany
92.5
87.4
41
33
Dakar Senegal
92.2
89.0
42
28
Kiev Ukraine
91.7
91.4
43
43
Luxembourg Luxembourg
91.3
87.0
44
30
Almaty Kazakhstan
90.7
89.6
45
31
Bratislava Slovakia
90.6
89.2
46
45
Düsseldorf Germany
90.4
85.9
46
72
Riga Latvia
90.4
81.5
48
52
Mumbai India
90.3
84.9
49
59
Zagreb Croatia
90.0
83.5
50
57
Hamburg Germany
89.9
84.2
51
35
Abidjan Ivory Coast
89.6
88.3
52
34
Dubai UAE
89.3
88.8
53
84
Perth Australia
88.5
77.8
54
82
Toronto Canada
88.1
78.8
55
42
Los Angeles US
87.5
87.1
55
68
New Delhi India
87.5
82.3
57
50
Algiers Algeria
86.8
85.1
57
71
Lyon France
86.8
81.9
57
73
Lisbon Portugal
86.8
80.8
57
86
Brisbane Australia
86.8
76.9
61
53
Shenzhen China
86.3
84.7
61
60
Budapest Hungary
86.3
83.1
63
48
Taipei Taiwan
86.1
85.8
64
89
Vancouver Canada
85.8
76.5
65
45
Abu Dhabi UAE
85.7
85.9
66
41
Birmingham UK
85.4
87.2
66
92
Calgary Canada
85.4
75.5
68
74
Limassol Cyprus
84.6
80.6
69
36
Glasgow UK
84.0
88.1
70
68
Guangzhou China
83.9
82.3
71
78
Bucharest Romania
83.6
79.6
72
98
Montréal Canada
83.0
74.5
73
96
Adelaide Australia
82.8
74.7
74
118
Tehran Iran
82.2
68.6
75
51
Miami US
82.0
85.0
76
90
Tallinn Estonia
81.6
76.4
77
64
Honolulu US
81.4
82.5
78
54
San Francisco US
81.0
84.6
78
99
Auckland New Zealand
81.0
73.9
80
63
Beirut Lebanon
80.8
82.6
81
80
Casablanca Morocco
80.7
78.9
82
55
Jakarta Indonesia
80.5
84.5
82
93
Ljubljana Slovenia
80.5
75.3
84
58
Chicago US
80.3
83.7
85
97
Vilnius Lithuania
80.2
74.6
85
109
Ottawa Canada
80.2
72.3
87
112
Bogotá Colombia
80.1
71.7
88
77
Amman Jordan
79.6
79.8
89
70
White Plains, NY US
79.3
82.1
89
129
Caracas Venezuela
79.3
65.4
91
56
Hanoi Vietnam
79.0
84.3
92
102
Santiago Chile
78.5
73.3
93
111
Wellington New Zealand
77.6
71.8
94
80
Kuwait City Kuwait
77.5
78.9
95
104
Leipzig Germany
77.1
72.9
96
76
Accra Ghana
77.0
79.9
97
108
Sofia Bulgaria
76.9
72.5
98
83
Houston, TX US
76.8
78.6
99
79
Boston, MA US
76.5
79.2
100
60
Ho Chi Minh City Vietnam
76.3
83.1
101
93
Cairo Egypt
75.9
75.3
101
101
Lusaka Zambia
75.9
73.5
103
102
Nairobi Kenya
75.7
73.3
104
75
San Juan Puerto Rico
75.4
80.3
105
95
Bangkok Thailand
75.1
74.9
106
106
Kuala Lumpur Malaysia
75.0
72.8
107
85
Washington, DC US
74.6
77.0
108
104
Mexico City Mexico
73.6
72.9
109
87
Atlanta, GA US
73.5
76.6
110
137
Manila Philippines
73.4
61.2
111
87
Morristown, NJ US
73.1
76.6
112
91
Manama Bahrain
71.1
76.2
113
100
Seattle, WA US
70.9
73.7
114
114
Bandar Seri Begawan Brunei
70.6
71.0
115
117
Lima Peru
70.5
70.0
115
115
Denver, CO US
70.5
70.8
117
133
Chennai (Madras) India
69.3
63.7
118
134
Bangalore India
69.2
63.6
119
110
Riyadh Saudi Arabia
68.7
72.2
120
115
St. Louis, MO US
68.5
70.8
120
121
Kingston Jamaica
68.5
68.5
122
107
Guatemala City Guatemala
68.1
72.6
123
130
Tianjin China
67.9
64.7
124
124
Panama City Panama
67.3
67.4
125
127
Blantyre Malawi
67.1
66.4
126
113
Jeddah Saudi Arabia
66.8
71.4
127
118
Detroit, MI US
66.3
68.6
128
123
Portland, OR US
66.2
67.8
129
118
Cleveland, OH US
66.0
68.6
130
130
Colombo Sri Lanka
65.9
64.7
131
122
Monterrey Mexico
65.8
68.1
132
125
Dacca (Dhaka) Bangladesh
65.0
66.8
133
128
Pittsburgh, PA US
64.4
66.3
133
135
Tunis Tunisia
64.4
63.4
135
126
Winston-Salem US
63.5
66.7
136
140
Montevideo Uruguay
63.2
58.4
137
132
Santo Domingo Dominican Rep.
62.8
64.2
138
139
Buenos Aires Argentina
62.7
60.3
139
138
San José Costa Rica
60.6
60.5
140
136
Johannesburg South Africa
60.4
61.3
141
142
Karachi Pakistan
54.7
56.1
142
141
Quito Ecuador
54.6
56.3
143
143
Asunción Paraguay
52.5
50.0

Mercer’s survey covers 143 cities across six continents and measures the comparative cost of over 200 items in each location, including housing, transportation, food, clothing, household goods and entertainment. It is the world’s most comprehensive cost of living survey and is used to help multinational companies and governments determine compensation allowances for their expatriate employees.

Yvonne Traber, a principal and research manager at Mercer, commented, “Current market conditions have led to the further weakening of the US dollar which, coupled with the strengthening of the Euro and many other currencies, has caused significant changes in this year’s rankings. Although the traditionally expensive cities of Western Europe and Asia still feature in the top 20, cities in Eastern Europe, Brazil and India are creeping up the list. Conversely, some locations such as Stockholm and New York now appear less costly by comparison.”

She added: “The research confirms the global trend in price increases for certain foodstuffs and petroleum, though the rise is not consistent in all locations. This is partly balanced by decreasing prices for certain commodities, such as electronic and electrical goods. Mercer attribute this to cheaper imports from developing countries, especially China, and to advances in technology. Keeping on top of the changes in expatriate cost of living is essential so companies can ensure their employees are compensated fairly and at competitive rates when stationed abroad.”

Traber added: “In some cases, cost of living increases may be correlated to countries with a high rate of economic growth. Companies may assign high priority to expansion in these economies but may have to deal with inflationary pressures due to competition for expatriate-level housing and other services.”

For example, Latvia had real GDP growth of 10.2 per cent in 2007, well above the global average growth rate of 5.2 per cent, and its capital, Riga, jumped to 46th place in the latest Mercer ranking, up from 72nd a year ago. Cities in India all rose in the cost of living ranking, with New Delhi climbing to 55th place from 68th a year ago, as India posted a real GDP growth rate of 9.2 per cent in 2007. Bogota jumped to 87th place from 112th, reflecting Colombia’s 7 per cent real GDP growth.

The Americas
The only North American city to feature in this year’s top 50 is New York in 22nd place (score 100), dropping seven places in one year. All other US cities also experienced a significant decline in the rankings. For example, Los Angeles moved from 42nd to 55th place (score 87.5), Miami from 51st to 75th place (score 82) and Washington, DC, from 85th to 107th place (score 74.6).

"The decline in the ranking of all US cities is due to the weakening value of the US dollar against other major world currencies," said Mitch Barnes, principal at Mercer in the US. "The dollar has been declining steadily for the past several years, which has resulted in an overall decrease in the cost of living in 19 US cities relative to other major global cities studied. On the bright side, the US dollar's loss of value may serve to attract globally mobile executives to business centers such as New York, Chicago and Los Angeles. The difference in cost of living can be significant, particularly for those executives with families."

In 54th place (score 88.1), jumping 28 places from last year, Toronto is the most expensive city for expatriates living in Canada. All other Canadian cities in the survey experienced similar rises, with Vancouver moving from 89th to 64th (score 85.8), Calgary from 92nd to 66th place (score 85.4) and Montréal from 98th to 72nd with a score of 83. This reverses last year’s trend, which saw Canadian cities decline, and places them back where they have traditionally been rated. The Canadian dollar has appreciated nearly 15 per cent against the US dollar, the main reason for these movements.

The two top-ranking cities in South America are São Paulo in 25th place (score 97) and Rio de Janeiro in 31st place (score 95.2), jumping 37 and 33 places, respectively. The Brazilian real appreciated nearly 18 per cent against the US dollar last year, causing these Brazilian cities to rocket up the list. Another high-riser in this region is Caracas, jumping 40 places from 129th to 89th place (score 79.3). High inflation in Venezuela has caused a sharp increase in the price of food and household products.

South America also has some of the lowest ranking cities globally. Asunción is the least expensive city in the region for the sixth consecutive year (score 52.5), followed by Quito in Ecuador in 142nd place (score 54.6), Buenos Aires in 138th place (score 62.7) and Montevideo in 136th place (score 63.2).

Europe, Middle East and Africa
Moscow is ranked the most expensive city both in Europe and globally for the third year running. The city’s score has steadily increased over the last few years and is currently at 142.4 (compared to 134.4 in 2007 and 123.9 in 2006). “Moscow’s position as the most expensive place for expatriate living has been strengthened by the appreciation of the rouble against the US dollar and the continuous rising accommodation costs,” said Ms Traber.

London is the next European city in the ranking at 3rd place (score 125), down from last year, while Oslo jumped six places to rank 4th with a score of 118.3. Norwegian property prices were at an all-time high towards the end of last year after a 50 per cent increase in the last five years. Coupled with the continuous strengthening of the Norwegian krone, this has created a substantial increase in living costs for expatriates in Oslo. London’s drop can be explained by the weakness of the pound sterling against the euro and other currencies and, more importantly, to the British currency’s stability against the dollar. For example, while the euro reached a record high against the dollar in the early summer of 2008 (1.60 dollars to the euro), the pound sterling – at 1.99 dollars to the pound was well down from last year’s record high of 2.10.

Other European cities in the global top 10 include Copenhagen at 7th place (117.2) and Geneva in 8th place (115.8). Both cities have dropped one place from last year. Zurich remains in 9th place (112.7), whereas Milan climbs to 10th place with a score of 111.3. Sofia in Bulgaria is again the least expensive European city for expatriates in 97th place (76.9), although the city has climbed 11 places in the overall ranking.

Several European cities have experienced a significant rise in the rankings this year, mainly as a result of local currency strengthening against the US dollar. For example, Prague has jumped from 49th to 29th place (score 96) and Warsaw is up to 35th place (score 95) compared to 67th in 2007. Istanbul has climbed 15 places to rank 23 (score 99.4) reflecting the Turkish lira’s significant appreciation against the US dollar as well as general price increases, especially for accommodation.

In addition to London dropping one place, two additional UK cities, Birmingham and Glasgow, have both moved down in the rankings, dropping from 41st to 66th (score 85.4) and 36th to 69th (score 84), respectively. “In contrast to the strengthening euro and other European currencies, the British pound has remained relatively stable against the US dollar. As the cost of living in the Eurozone has risen relative to the US, UK cities have declined in the rankings,” according to Ms. Traber.

Tel Aviv is again the most expensive city in the Middle East at 14th place (score 105), up three places from 2007. Both Dubai and Abu Dhabi have dropped significantly this year, at positions 52 (score 89.3) and 65 (score 85.7), respectively. This is mainly due to the UAE dirham being pegged to the US dollar. Most African cities in the survey have moved down the ranking with the exception of Lagos in Nigeria, which has jumped seven places to join the top 30 at position 30 (score 95.9).

Asia
Tokyo is the costliest Asian city, in 2nd place (score 127), rising two places since last year. Seoul follows in 5th place (score 117.7) and Hong Kong closely follows after in 6th place with a score of 117.6. Singapore ranks 13th and holds a score of 109.1. Karachi continues to be the least costly city in this region in 141st place with a score of 54.7.

While the five top-scoring cities in Asia remain relatively stable in the ranking, there have been significant changes further down the list. In India, Mumbai moves up four places to reach 48th (score 90.3), whereas New Delhi climbs 13 places to 55th place (score 87.5) due to the strengthening of the India rupee against the US dollar. Although India has experienced relatively high inflation, this has increased at similar pace to New York and has therefore had a reduced impact on its cities’ rise in the rankings. Manila rises a total of 27 places, ranking 110th with a score of 73.4, mainly as a result of price increases for international-standard accommodation.

In contrast, certain cities in this region have experienced significant declines in the ranking. Some examples are Jakarta, falling from 55th to 82nd place (score 80.5), and Bangkok, dropping from 95th to 105th place with a score of 75.1. In Vietnam, Hanoi drops 35 places to rank 91st place (score 79) and Ho Chi Minh City drops 40 places to rank 100th place (score 76.3), mainly because the Vietnamese dong has remained stable against the US dollar and so has pushed these cities down on the list. The low level of inflation observed for goods in these Vietnamese cities compared to in New York has further widened the gap.

Australia and New Zealand
Sydney continues to be the most expensive city for expatriates in this region, moving up six places in the overall ranking to reach 15th place (score 104.1). Melbourne follows in 36th place (score 94.2), jumping 28 places and Perth climbs 31 places to reach ranking number 53rd (score 88.5).

Both Australian and New Zealand cities are moving up in the rankings due to the appreciation of their local currencies against the US dollar. However, New Zealand’s cities remain the less costly option for expatriates, with Auckland in 78th place (score 81) and Wellington in 93rd place (score 77.6).

Notes:
The figures for Mercer’s cost of living comparisons are based on a survey conducted in March 2008. The 2008 comparisons are based on a similar survey conducted in March 2007. The information is used by governments and major companies to protect the purchasing power of their employees when transferred abroad. The choice of cities surveyed is based on the demand for corresponding data from companies and governmental organizations.



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