In December ECA International released a report covering all of 2013 listing which cities favoured by expatriates prove to be the most expensive to move to in the world. ECA International is a consulting firm assisting companies with the management of their international assignees all over the world. Their report makes for compelling reading.
Tokyo has been the most expensive city in the world to relocate to for a long time but since the weakening of the Yen it has since dropped to 10th position. Surprisingly Caracas in Venezuela has now topped the list of the top ten most expensive global cities to relocate to, having only been in 7th position this time last year. However experts are suggesting that Caracas will not hold this position for very long, as the Venezuelan government may have to devalue its currency in the near future. Caracas at present is experiencing high inflation and suffers from a severe shortage of exported goods even though the bolivar, their currency, is falling in value. As a result Caracas has now become the most expensive city in the world for expatriates above Luanda, Tokyo and Oslo, all three cities who regularly find themselves in the top places on the list. ECA International are also warning companies who have expatriate staff in Caracas to monitor what happens with the currency there so that appropriate living costs can be granted to their employees.
The ECA reported that their “shopping basket” in Caracas has risen by over 60% in the past year. The ECA International “shopping basket” is based on the cost of living covering the following items:
• General Everyday Items: To include clothing, eating out, electrical goods and motoring.
• Food: To include groceries, fish, meat, fresh fruit and vegetables and dairy products.
• Basic Items: To include: Drink, tobacco, services and miscellaneous goods.
The figures were compiled through surveys carried out between September 2012 and September 2013. The survey did not include accommodation costs for expatriates or their car rentals. School fees were also not included in the survey because these items are usually covered in an expatriate package.
Following Caracas on the list is Luanda, the capital of Angola and Oslo, the capital of Norway.
When multinational companies send staff on international assignments they often include a cost of living allowance within their pay package. This can be affected by exchange rates, inflation and the availability of goods whilst in that country. ECA International carry out two Cost of Living Surveys every year where they compare goods and services which are most purchased by assignees in over 440 locations worldwide, which then creates their ‘shopping basket’.
Surprisingly Manhattan is the 33rd most expensive city for expatriates to relocate to, some would think that it would achieve a much higher position, but it is still the most expensive city to relocate to within America. Vancouver is the most expensive Canadian city within the Americas but is only 53rd in the global list. In regards to Latin America obviously Caracas tops the global list then Haiti comes next at 57th position. Brazilian cities have fallen in the rankings quite dramatically, Rio de Janeiro has dropped to 130th in the world largely due to the depreciation in the Brazilian Real over the year, making Brazil a much cheaper place for expatriates to relocate to.
Asia still has Tokyo as the most expensive city even though it has fallen on the global list due to the Yen. Companies will now find it a lot cheaper to relocate staff to Tokyo than it once was a few years back. Weaker currencies play a huge part in a city’s position; Jakarta has dropped to 172nd in the world.
Alternatively some of China’s cities have gone up in the ranks, such as Shanghai now 18th in the world when it was 25th. Beijing is the second most expensive city in Asia after Tokyo but if the ECA International survey included housing costs within their survey then it would drop in the list because housing is a lot cheaper here than elsewhere like Tokyo and Hong Kong.
Australian cities have now dropped out of the top thirty altogether just in the last year, largely due to the dollar weakening against other major currencies. Just a year ago both Sydney and Canberra were both in the top twenty but they have now dropped to 31st and 39th position respectively.
Europe has Oslo as it’s most expensive city sitting at number three in the global list but the top 10 cities in Europe are dominated by Western European cities in countries such as Scandinavia, Finland and Switzerland, apart from Moscow which also features in the top ten. This is due to the euro being strengthened against the dollar. Turkish cities have seen dramatic drops in the list because of the depreciation of the lira.
In the Middle East Tel Aviv tops the list, sitting at 24th position globally followed by Jerusalem at 27th position, again they have risen due to the strengthening of the Shekel. In The UAE both Dubai and Abu Dhabi have risen in the ranks to 171st and 180th respectively.
Luanda is the most expensive city in Africa and 2nd globally, typically because the cost of goods purchased here by expatriates are high due to import and transportation costs.