Hong Kong has once again ranked as the world’s most expensive city for expatriates to live and work. This is according to the findings of the latest research on cost of living by human resources consultancy ECA International.
“Despite falling rental prices and a weakened currency, Hong Kong has retained its spot as the most expensive location in the world for expatriates to live and work” says Lee Quane, ECA International regional director for Asia. “The Hong Kong dollar was weaker over the past 12 months than many other major currencies such as the euro and yuan. However, with New York facing similar issues, Hong Kong retained its top spot while New York fell two places to fourth in the rankings.”
According to the study, the majority of Chinese cities have risen in the latest rankings, with Guangzhou joining Shanghai in the global top ten for the first time. Shenzhen and Beijing are also in the top ten most expensive cities in Asia and the top 20 globally.
“The yuan has enjoyed a strong year as the Chinese economy bounced back quickly from the pandemic, making most locations in the country more expensive for overseas workers than in previous years,” Quane notes. “The Pearl River Delta remains an attractive option for many international businesses, and Guangzhou and Shenzhen are expensive for overseas workers due to high rents and growing demand for properties in these cities.”
Singapore has dropped one place to 13th in the global rankings after falling below the cities of Guangzhou and Shenzhen but pushing above San Francisco.
“Although Singapore dropped one spot in the rankings, this is mainly because of the changes in other cities around them in the list. With prices in Singapore quite stable, the change in costs for overseas workers in Singapore will depend primarily on currency changes. The Singapore dollar has been a little weaker than the yuan in the last 12 months, thus causing it to fall behind Shenzhen and Guangzhou in our rankings,” he explains.
Thai and Vietnamese locations continued to fall in the rankings, as their tourism-dependent economies still seek to recover from the pandemic. Bangkok dropped 11 places to 34th, while Hanoi dropped 20 places and fell out of the global top 100 to 115th most expensive location.
“Cities that would have experienced high levels of tourism and overseas visitors before the Covid-19 pandemic have sunk in the rankings since the start of 2020, as their economies take a hit due to heavily restricted international travel. These effects can be seen in weaker currencies, with the baht and the dong significantly weaker against the euro and lower rental prices in properties targeted at foreigners. Bangkok and Hanoi have seen rents drop over the past 18 months as demand falls in these locations,” says Quane.
ECA International has been conducting research into cost of living for 50 years. It carries out two main surveys per year to help companies calculate cost-of-living allowances so that their employees' spending power is protected while on international assignment. The surveys compare a basket of like-for-like consumer goods and services commonly purchased by assignees in over 480 locations worldwide. ECA’s accommodation data are also factored in, comparing rental costs in areas typically inhabited by expatriate staff in over 400 locations worldwide.
US dollar impact
Elsewhere in the world, US locations fell in the global rankings after a tough period for the US dollar. San Francisco dropped out of the global top ten to 15th place and New York dropped two places to 4th globally.
Quane says: “The US dollar has struggled against other major currencies in recent months, in part due to the large stimulus packages introduced by Presidents Trump and Biden, and this has caused drops for US cities in the rankings. This has affected every US city in our rankings, including New York which has been overtaken by Tokyo and Geneva this year. New York was among a group of large US cities, including San Francisco and Chicago, that saw city centre rental prices drop as people moved away from the cities due to the rise in home working during the pandemic, allowing people to work from anywhere.”
In contrast, Australian locations all rose significantly in the latest rankings, as the country recovered strongly after a series of major Covid-19 lockdowns in some states. Sydney rose 17 places into the top 50 but Perth saw the biggest jump of any location in the rankings, rising 51 places to 74th position globally.
“Australia has seen a significant rebound from this time last year when many residents were experiencing strict lockdowns in the face of the Covid-19 pandemic. As these restrictions have eased, the Australian economy has rebounded well thanks to a strong demand for its commodity exports. This has strengthened the Australian dollar, pushing all Australian cities up in the rankings as the currency now goes further abroad, though with the country currently closed to most overseas travel, it has not been possible for many workers to experience these benefits. Sydney now sits in the top 50 most expensive locations globally and Melbourne and Canberra just outside at 51st and 52nd respectively” says Quane.
Strong euro and pound
The vast majority of eurozone and UK cities moved up the rankings due to strong currencies and despite low levels of inflation. He says: “The euro and pound both grew in strength in comparison to the weaker US dollar as European economies rebounded after pandemic restrictions eased and Brexit uncertainty subsided. This has meant that many cities in Europe have risen in the rankings from last year as visitors will find it more expensive to buy the same goods and services in their home currency, with locations such as Vienna and Munich moving into the global top 50 and London climbing one place to enter the top 5 most expensive locations for expats.”
Rio de Janeiro saw the biggest fall in the rankings this year, dropping 52 places to 163rd despite rising inflation, as the Brazilian real continued to weaken amidst high Covid-19 rates and historically low interest rates.