Tokyo Tops Cost League For Expat Workers
Thursday, December 15, 2011

Tokyo remains the most expensive city in the world for international assignees as the rising value of the yen continues to put upward pressure on the cost of living in the country, according to a new report.

The 2011 Cost of Living Survey by ECA International indicates that Tokyo is the world's most expensive city for expat workers for the second consecutive year, with three other Japanese cities also featuring in the top ten of the global index, including Nagoya in 4th place, Yokohama (6th), and Kobe (10th).

The Norwegian capital Oslo was ranked as the world's second-most expensive city for international assignees, with Geneva in third place. Three other Swiss cities were placed in the global top ten, including Zurich (5th), Bern (7th) and Basel (9th), despite the value of the Swiss franc falling against major currencies in the aftermath of the Swiss National Bank's move to set a minimum exchange rate against the euro.

Despite much turmoil in the eurozone, the euro has strengthened on average against other major currencies over the last year. As a result, locations in the zone have risen in the ranking, while those in the US, for example, and in locations where the currency is pegged to the US dollar, such as Hong Kong, have typically fallen.

Hong Kong has tumbled down the list of most expensive locations as a weaker dollar continues to negate the impact of rising prices. Hong Kong's 26-place drop in the global ranking is the largest fall of any city in Asia and puts the SAR in 58th position globally. Within the region, Hong Kong has slipped from being the 6th to the 9th most expensive location, despite the price of goods there having increased even more than this time last year.

"We are typically seeing higher price levels across the region compared with September 2010, and Hong Kong is no exception: items in ECA's cost of living basket have gone up by more than 7% in the last twelve months," said Lee Quane, Regional Director, Asia for ECA International. "However, when we look at Hong Kong in a regional context, the weak dollar means that the city is now cheaper than a number of other locations including Singapore, Beijing and Shanghai, where there has not only been significant price inflation but also currencies have strengthened. While this is good news for many companies who have international assignees in Hong Kong, sending staff out of Hong Kong could become more expensive for businesses if allowances designed to protect an employee's purchasing power whilst on assignment need to be increased."

"While, in locations like Singapore, price inflation has worked alongside exchange rate movements to push a location up the cost of living ranking, in other cases currency fluctuations are still outweighing the impact of inflation,” explains Quane. “For example, despite dramatic price increases in Vietnam, the devaluation of the dong earlier this year has caused locations there to drop down the ranking. So while locals will see their costs going up, the spending power of assignees will have increased due to the effect of exchange rates."

Caracas (13th) continues to be the most expensive location for international assignees in the Americas. The Venezuelan capital is followed by Rio de Janeiro, placed 22nd globally, and Sao Paolo in 29th position.

Vancouver, placed 43rd globally, is the most costly location in North America. New York's Manhattan is in 46th position, down from last year's 28th place. Locations across the United States have seen some of the biggest falls in the global ranking, largely due to the depreciation of the US dollar against many major currencies.