Dubai and Abu Dhabi have been ranked as the 67th and 68th most expensive cities to live (respectively), according to Mercer’s 2014 Cost of Living Survey. Dubai was one of several cities in the region that experienced a jump in their rankings, with the emirate soaring 23 places from last year’s position at 90. Abu Dhabi experienced a less significant rise of 11 places from number its 2013 placement at 79. Beirut tops the regional index for the highest rates of living expenditure incurred by expatriates, coming in at number 63. Riyadh raises 11 places to rank at 111th, while Jeddah continues to rank as the least expensive city in the region, being placed at 175.
The reports’ authors say that the cities that have made significant advances up the table have been pushed up by other locations’ decline, as well as the strong increase for expatriate rental accommodation costs – particularly the case with Abu Dhabi and Dubai.
“Dubai is now on a strong economic hub following the global market depression of 2008 and this renewed economic strength is reflected in an increase in accommodation costs, which is the main reason why the city has jumped so many places in Mercer’s 2014 Cost of Living Survey,” said Nuno Gomes, Principal, Information Solutions Leader Middle East, Mercer.
“The steep rise in rental prices is a phenomenon witnessed over the past 18 months and can be traced to a renewed sense of confidence in the city, particularly in the wake of the Expo 2020 build-up and award. I believe that the situation will stabilise as we start to see more and more of the building projects that have been restarted after being put on hold come on line,” he added.
Most other cities from across the Middle East region have gone up in the 2014 ranking, mainly due to global currency fluctuations. Apart from Dubai, Jeddah is the only other non-capital city in the ranking and is the lowest ranked city from the region. Mahmoud Ghazi, Information Solutions Leader for Saudi Arabia, Mercer says “Jeddah remains a less explored destination for international assignees and expatriates in general, which makes it very affordable. When it comes to Riyadh, despite its rise of 11 places in the ranking, it still remains a relatively cheap location for expatriates. Most consumer-spending is actually quite affordable when comparing to the rest of the region, such as supermarket or food away from home, but the compound type of accommodation keeps Riyadh’s ranking at a higher level,” he added.
Two African cities top the list of most expensive cities for expatriates. Although not typically recognised as wealthy cities compared to others, Luanda in Angola is the world’s most expensive city for the second year in a row, followed by N’Djamena, Chad. European and Asian cities also continue to dominate as the costliest cities with Hong Kong in third place, followed by Singapore. Zurich jumped three places to rank fifth, followed by Geneva in sixth. Tokyo dropped four spots to rank seventh.
Mercer’s authoritative survey is one of the world’s most comprehensive, and is designed to help multinational companies and governments determine compensation allowances for their expatriate employees. New York is used as the base city, and all cities are compared against it. Currency movements are measured against the US dollar. The survey covers 211 cities across five continents and measures the comparative cost of over 200 items in each location, including housing, transportation, food, clothing, household goods and entertainment.
Other cities appearing in the top 10 of Mercer’s costliest cities for expatriates are Bern, Moscow, and Shanghai. Karachi, ranked 211, is the world’s least expensive city for expatriates. Currency fluctuations and the impact of inflation on goods and services influenced the cost of expatriate programmes, as well as the city rankings.
Rankings in many regions were affected by recent world events, including economic and political upheavals, which resulted in currency fluctuations, cost inflation for goods and services, and volatility in accommodation prices. While Luanda and N’Djamena are relatively inexpensive cities, they are quite costly for expatriates since imported goods come at a premium. In addition, finding secure living accommodations that meet the standards of expatriates can be challenging and quite costly as well. This is generally why some African cities rank high in our survey.
Cities in the United States have climbed in the ranking due to the relative stability of the US dollar against other major currencies, in addition to the significant drop of cities in other regions which resulted in US cities being pushed up the list. A rise in the rental accommodation market pushed New York up 8 places to rank 16, the highest-ranked city in the region. Los Angeles (62) climbed 10 places from last year while San Francisco (74) jumped eighteen places. Among other major US cities, Honolulu (97) is up twenty places, Miami (98), is up sixteen places, and Boston (109) is up fourteen spots. Cleveland (167) and Winston Salem, North Carolina (182) remain the least expensive surveyed cities for expatriates.
In South America, São Paolo (49) ranked as the costliest city, followed by Rio de Janeiro (65).
Yet, both cities dropped thirty and thirty-six positions, respectively, as a result of the Brazilian real weakening against the US dollar despite increases in rental prices. Buenos Aires also dropped significantly this year to rank 86, following the devaluation of its currency, and despite a strong price increase for goods and services. Other cities in South America that fell on the list of costliest cities for expatriates were Santiago, Chile, dropping twenty-five places to rank 88 and Bogota, falling thirty-eight places to rank 98. Managua, Nicaragua (207) is the least expensive city in South America.
As explained, the exchange rate has a major impact on a city ranking. This year Mercer left Caracas out of the ranking due to the multiple, complex exchange rate situation; its ranking would have varied greatly depending on the official exchange rate selected.
Canadian cities dropped in this year’s ranking with the country’s highest-ranked city, Vancouver, falling thirty-two places to rank 96. Toronto (101) dropped thirty-three spots, while Montreal (123) fell twenty-eight spots. Calgary’s ranking dropped to rank 125. “The Canadian dollar weakened significantly against the US dollar, which accounts for the major slips we saw in this year’s ranking,” explained Mr. Hannibal.
Europe and Africa
Four European cities remain in the top 10 list of most expensive cities. Zurich (5) is the most costly European city on the list, followed by Geneva (6) and Bern (8). Switzerland remains one of the most expensive locations for expatriates following the slight strengthening of the Swiss franc against the US dollar. Moscow (9) and St. Petersburg (35) dropped seven and twelve spots, respectively, due to a dramatic depreciation of the ruble against the US dollar.
Overall, Western European cities have all risen in the rankings mainly due to the strengthening of local currencies against the US dollar. In particular, cities in the United Kingdom and Germany experienced some of this year’s biggest surges in the ranking, with Glasgow (108) rising forty-nine places from 2013, while Aberdeen (94) and Birmingham (90) jumped thirty-four and forty-five spots, respectively. Munich (55) rose twenty-six places from last year, Frankfurt (59) jumped twenty-four spots, and Berlin (68) soared thirty-one places from its previous ranking. Dusseldorf and Hamburg also rose significantly.
Other cities that jumped in the ranking include Paris (27), up ten places from last year, Milan (30), up eleven spots, Rome (31), up thirteen and Vienna (32) up sixteen spots.
Most cities in Eastern and Central Europe, however, fell in the ranking as a result of local currencies depreciating against the US dollar. Prague (92), Almaty (111), and Minsk (191) fell nineteen, sixteen, and four spots, respectively, despite there being stable accommodations in these locations.
Quite a few African cities continue to rank high in the 2014 survey, reflecting high living costs and prices of goods for expatriate employees. Luanda (1) remains the most expensive city for expatriates across Africa and globally, and Ndjamena follows in second place. Victoria, Seychelles (13) is the next costliest city in Africa followed by Libreville, Gabon (19). In South Africa, Cape Town (205) fell eight places in the ranking, reflecting the weakening the South African rand has suffered against the US dollar.
Four of the top 10 cities in this year’s ranking are in Asia. The most expensive city, Hong Kong (3), jumped three places from last year. Singapore (4) is the next most expensive city in the region, gaining one position from last year, followed by Tokyo, which ranked 7 dropping four places this year. Jumping four spots since last year, Shanghai (10) is the next Asian city on the list, followed by Beijing (11), Seoul (14), and Shenzhen (17).
Australian cities have witnessed some of the most dramatic falls in the ranking this year as the local currency has depreciated against the US dollar. Sydney (26), Australia’s most expensive ranked city for expatriates, and Melbourne (33) dropped seventeen places while Perth (37) fell nineteen spots.
Mumbai (140) is India’s most expensive city, followed by New Delhi (157) and Chennai (185). Bangalore (196) and Kolkata (205) are the least expensive Indian cities ranked. Elsewhere in Asia, Bangkok (88) dropped twenty-two places from last year. Kuala Lumpur, Malaysia, ranks 115, followed by Indonesia’s Jakarta which ranked 119, falling forty-eight places from 2013. Hanoi jumped three spots to rank 131. Karachi, Pakistan (211) remains the region’s least expensive city for expatriates.
Mercer produces individual cost of living and rental accommodation cost reports for each city surveyed. For more information on city rankings, visit www.mercer.com/col. To purchase copies of individual city reports, visit www.imercer.com/col or call Client Services in Warsaw on +48 22 434 5383.