Hong Kong has overtaken the Angolan capital Luanda to be named the world’s most expensive city for expatriates in the annual survey of 209 cities by consultants Mercer.
The survey, which looks at the prices of more than 200 items in categories from accommodation and transport to clothing and food, is designed to help companies devise relocation packages for overseas assignees.
Hong Kong's return to the top of rankings reflects the $6,809 monthly average for renting an unfurnished, two-bedroom apartment of "international standards in an appropriate neighbourhood". The cost in Luanda, where there are far fewer of properties deemed suitable for expats and where the local currency has weakened over the past year, is $6,700 a month.
The Mercer survey, however, is at odds with an Economist Intelligence Unit report
earlier this year, which looked at 133 cities worldwide and which rated Singapore as the priciest ahead of Zurich, Hong Kong, Geneva and Paris.
Mercer's calculations use New York as the base city for all comparisons, while currency movements are measured against the US dollar. Under these calculations, Zurich, Singapore and Tokyo round off the top five most expensive cities, while Windhoek in Namibia, Cape Town and Bishkek in Kyrgyzstan are adjudged the three cheapest.
The report said that, despite volatile global markets and growing security issues, organisations continue to leverage global expansion strategies to remain competitive "yet, few organisations are prepared for the challenges world events have on their business, including the impact on cost of expatriate packages".
Ilya Bonic, senior partner and president of Mercer’s talent business, said, “Despite technology advances and the rise of a globally connected workforce, deploying expatriate employees remains an increasingly important aspect of a competitive multinational company’s business strategy.
“However, with volatile markets and stunted economic growth in many parts of the world, a keen eye on cost efficiency is essential, including a focus on expatriate remuneration packages. As organisations’ appetite to rapidly grow and scale globally continues, it is necessary to have accurate and transparent data to compensate fairly for all types of assignments
, including short-term and local plus status.”
The fall in the value of the pound, primarily as a result of uncertainty surrounding Thursday's referendum
on continued membership of the European Union, has seen London drop from 12th to 17th place in this year's list. The report said London would have fallen even further but for "steep rental prices
Ellyn Karetnick, head of international mobility at Mercer, said, "Although the value of the euro has remained steady against the US dollar, the pound has fallen, largely due to Brexit fears.
"But whilst currency fluctuations will always cause a major impact on costs, local conditions like high property prices can counterbalance the impact of currency movements, as demonstrated with UK and Western European cities."
On Europe, the Middle East and Africa, Nathalie Constantin-Métral, principal at Mercer with responsibility for compiling the survey ranking, said, “Despite some marked price increases across the region, several local currencies in Europe have weakened against the US dollar which pushed a few cities down in the ranking. Additionally, other factors like recent security issues, social unrest, and concern about the economic outlook have impacted 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 Jeddah."
In the United States, the report said that cities had climbed the ranking due to the strength of the US dollar against other major currencies, with New York up five places to 11th, and San Francisco (26) and Los Angeles (27) climbing 11 and nine places respectively.
Turning to Asia, Ms Constantin-Métral said, “The strengthening of the Japanese yen pushed Japanese cities up in the ranking. However, Chinese cities fell in the ranking due to the weakening of the Chinese yuan against the US dollar.”
The the 20 most expensive cities (2015 rankings in brackets):
1. Hong Kong (2)
2. Luanda (1)
3. Zurich (3)
4. Singapore (4)
5. Tokyo (11)
6. Kinshasa (13)
7. Shanghai (6)
8. Geneva (5)
9. Ndjamena, Chad (10)
10. Beijing (7)
11. New York (16)
12. Shenzhen (14)
=13. Bern (9)
=13. Lagos (20)
15. Seoul (8)
16. Victoria, Seychelles (17)
17. London (12)
18. Guangzhou (15)
19. Tel Aviv (18)
20. Abuja, Nigeria (35)
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