Cost of Living Rankings: CEE Capitals Cheaper, Vienna is 32nd Most Expensive City

Published: July 25, 2014; 13:35 · (FriedlNews)

The Mercer's 2014 "Cost of Living Rankings" have been published and cover 211 cities across five continents. While Western European cities have all risen in the rankings mainly due to the strengthening of the Euro against the US dollar, most cities in Central and Eastern Europe (CEE), however have fallen in the ranking as a result of local currencies depreciating against the US dollar. Bratislava (#84), Prague (#92), Kiev (#98), Ljubljana (#116), Zagreb (#120), Budapest (#135), Warsaw (#142), Belgrade (#184).

2014 Cost of Living Rankings / Picture: © Mercer LLC

Same procedure as every year: the latest version of Mercer Consulting’s annual Cost of Living Survey is making the rounds again. The yearly report takes a look at expatriate expenses, from housing over food to leisure, in more than 200 cities around the world.

Just like last year’s top ten list, the 2014 ranking shows a sharp divide: The paradoxically cost-intensive capitals of two rather poor countries contrast with various affluent cities. Once more, the list unites the boomtowns of Asia and the consistently high living standard of stable Switzerland.

The 10 Costliest Destinations

• Luanda, Angola
• N’Djamena, Chad
• Hong Kong
• Singapore
• Zurich, Switzerland
• Geneva, Switzerland
• Tokyo, Japan
• Bern, Switzerland
• Moscow, Russia
• Shanghai, China

African, European, and Asian cities most expensive for expatriates due to currency fluctuations and the impact of inflation on goods and services

Two African cities top the list of most expensive cities for expatriates according to Mercer’s 2014 Cost of Living Survey. Although not typically recognized 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. Zurch 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.

“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,” said Ed Hannibal, Partner and Global Leader for Mercer’s Mobility practice. 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."

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, and the survey found that Luanda is more than three times as costly as Karachi.

According to Mr. Hannibal, “While multinationals continue to recognize the importance of having a global workforce and corporate assignments remain prevalent, they must be able to monitor and balance the cost of their expatriate programs. Employers need to evaluate the impact of currency fluctuations, inflation, and political instability when sending employees on overseas assignments while ensuring they retain talented employees by offering competitive compensation packages.”

Currency fluctuations and the impact of inflation on goods and services have influenced the cost of expatriate programs as well as the city rankings.

Nathalie Constantin-Métral, Principal at Mercer with responsibility for compiling the survey ranking, said, “Interestingly, several cities jumped up the list this year following large increases in both accommodation cost and demand, coupled with strong local currencies. Dhaka and Nairobi (both 117) and Dubai (67) soared thirty seven, thirty and twenty-three spots, respectively.”

Europe, the Middle East, 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.

Ms. Constantin-Métral explained, “Despite moderate price increases in most of the European cities, European currencies for the most part slightly strengthened against the US dollar, which pushed most Western European cities up in the ranking. There have been some increases in accommodation costs, due to strong demand for rentals, which has also been behind upward movement in rankings for some European cities – most notably Copenhagen, Amsterdam, and Frankfurt.”

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.

Rank 2014 Rank 2013 City Country
1 1 Luanda Angola
2 4 N'Djamena Chad
3 6 Hong Kong Hong Kong
4 5 Singapore Singapore
5 8 Zurich Switzerland
6 7 Geneva Switzerland
7 3 Tokyo Japan
8 9 Bern Switzerland
9 2 Moscow Russia
10 14 Shanghai China
11 15 Beijing China
12 25 London United Kingdom
13 22 Victoria Seychelles
14 13 Seoul South Korea
15 17 Copenhagen Denmark
16 24 New York City United States
17 29 Shenzhen China
18 32 Tel Aviv Israel
19 21 Libreville Gabon
20 33 Kinshasa Congo, Democratic Republic of
20 11 Oslo Norway
22 45 Noumea New Caledonia
23 12 Osaka Japan
24 35 Guangzhou China
25 36 Lagos Nigeria
26 9 Sydney Australia
27 37 Paris France
28 40 Brazzaville Congo, Republic of
29 39 Bamako Mali
30 41 Milan Italy
31 44 Rome Italy
32 48 Vienna Austria
33 16 Melbourne Australia
34 46 Conakry Guinea
35 23 St. Petersburg Russia
36 49 Abuja Nigeria
37 18 Perth Australia
38 42 Stockholm Sweden
39 52 Amsterdam Netherlands
40 51 Dakar Senegal
40 26 Nagoya Japan
42 55 Helsinki Finland
43 38 Abidjan Cote d'Ivoire
44 46 Douala Cameroon
44 55 Yaounde Cameroon
46 57 Baku Azerbaijan
47 69 Nanjing China
48 65 Qingdao China
49 19 Sao Paulo Brazil
50 67 Tianjin China
51 61 Dublin Ireland
52 28 Brisbane Australia
53 27 Canberra Australia
54 79 Shenyang China
55 81 Munich Germany
56 69 Brussels Belgium
56 77 Luxembourg Luxembourg
58 54 Auckland New Zealand
59 34 Adelaide Australia
59 83 Frankfurt Germany
61 62 Taipei Taiwan
62 72 Los Angeles, CA United States
63 76 Beirut Lebanon
63 81 Madrid Spain
65 29 Rio de Janeiro Brazil
66 57 Yangon Myanmar
67 90 Dubai United Arab Emirates
68 79 Abu Dhabi United Arab Emirates
68 99 Berlin Germany
70 85 Pointe-a-Pitre Guadeloupe
71 84 Barcelona Spain
71 97 Chengdu China
73 100 Dusseldorf Germany
74 92 San Francisco, CA United States
75 88 Riga Latvia
76 106 Hamburg Germany
77 53 Tehran¹ Iran
78 90 Athens Greece
79 103 Lyon France
79 75 Wellington New Zealand
81 78 Bandar Seri Begawan Brunei
81 114 Port-au-Prince Haiti
81 93 White Plains, NY United States
84 93 Bratislava Slovakia
85 101 Chicago, IL United States
86 59 Buenos Aires Argentina
87 102 Cotonou Benin
88 66 Bangkok Thailand
88 63 Santiago Chile
90 135 Birmingham United Kingdom
91 116 Stuttgart Germany
92 73 Prague Czech Republic
92 106 Washington, D.C. United States
94 128 Aberdeen United Kingdom
94 109 Lisbon Portugal
96 64 Vancouver Canada
97 117 Honolulu, HI United States
98 60 Bogota Colombia
98 103 Kiev Ukraine
98 114 Miami, FL United States
101 42 Djibouti Djibouti
101 68 Toronto Canada
103 89 Amman Jordan
103 31 Niamey Niger
105 113 Lome Togo
105 131 Ouagadougou Burkina Faso
107 125 Casablanca Morocco
108 157 Glasgow United Kingdom
109 123 Boston, MA United States
110 129 Tallinn Estonia
111 95 Almaty Kazakhstan
111 122 Riyadh Saudi Arabia
113 127 Limassol Cyprus
114 87 Montevideo Uruguay
115 111 Kuala Lumpur Malaysia
116 144 Ljubljana Slovenia
117 154 Dhaka Bangladesh
117 147 Nairobi Kenya
119 71 Jakarta Indonesia
120 158 Belfast United Kingdom
120 131 Zagreb Croatia
122 120 Maputo Mozambique
123 95 Montreal Canada
124 139 Algiers Algeria
125 97 Calgary Canada
125 135 Dallas, TX United States
125 103 Manila Philippines
128 110 Accra Ghana
129 148 Nurnberg Germany
130 139 Vilnius Lithuania
131 134 Hanoi Vietnam
132 144 Morristown, NJ United States
132 126 San Jose Costa Rica
134 106 Havana¹ Cuba
135 130 Budapest Hungary
135 141 Ho Chi Minh City Vietnam
135 85 Istanbul Turkey
135 112 Lima Peru
139 143 San Juan Puerto Rico
140 118 Mumbai India
141 153 Leipzig Germany
142 150 Warsaw Poland
143 144 Houston, TX United states
144 73 Brasilia Brazil
145 151 Panama City Panama
146 121 Kigali Rwanda
147 151 Atlanta, GA United States
147 141 Kuwait City Kuwait
149 133 Port of Spain Trinidad and Tobago
150 154 Manama Bahrain
150 138 Mexico Mexico
152 118 Ottawa Canada
153 154 Cairo Egypt
153 163 Khartoum¹ Sudan
153 159 Seattle, WA United States
156 160 Minneapolis, MN United States
157 124 New Delhi India
158 162 Doha Qatar
159 169 Bucharest Romania
160 160 Detroit, MI United States
161 163 St. Louis, MO United states
162 168 Pittsburgh, PA United states
163 170 Rabat Morocco
164 167 Colombo Sri Lanka
165 173 Port Louis Mauritius
166 173 Portland, OR United States
167 175 Cleveland, OH United States
168 170 Muscat Oman
169 177 Phnom Penh Cambodia
170 176 Guatemala City Guatemala
171 180 Damascus¹ Syria
172 181 Sofia Bulgaria
173 172 Santo Domingo Dominican Republic
174 148 Lusaka Zambia
175 182 Jeddah Saudi Arabia
176 163 Asuncion Paraguay
177 190 Quito Ecuador
178 186 Dar es Salaam Tanzania
178 163 Kingston Jamaica
180 185 Tashkent Uzbekistan
181 193 Harare Zimbabwe
182 193 Winston Salem, NC United States
183 178 Monterrey Mexico
184 192 Belgrade Serbia
185 179 Chennai India
186 182 Addis Ababa Ethiopia
187 195 Yerevan Armenia
188 199 Sarajevo Bosnia and Herzegovina
189 202 Tirana Albania
190 198 San Salvador El Salvador
191 187 Minsk Belarus
191 199 Nouakchott Mauritania
193 203 Skopje Macedonia
194 205 Kampala Uganda
194 195 Tbilisi Georgia
196 189 Bangalore India
197 184 Gaborone Botswana
198 201 Ashkhabad Turkmenistan
199 190 Banjul Gambia
200 204 Tegucigalpa Honduras
201 209 Blantyre Malawi
202 210 Tunis Tunisia
203 187 Johannesburg South Africa
204 211 La Paz Bolivia
205 197 Cape Town South Africa
205 206 Kolkata India
207 212 Managua Nicaragua
208 208 Islamabad Pakistan
209 213 Bishkek Kyrgyzstan
210 207 Windhoek Namibia
211 214 Karachi Pakistan

The Americas

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.

Mr. Hannibal added, “Even though we saw US cities rise in the rankings this year due in part to the strength of the US dollar, it’s important to note that relative costs shift with currency volatility, making overseas assignment costs sometimes greater and sometimes smaller.”

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.

Asia Pacific

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).

“Japanese cities have dropped in the ranking this year as a result of the yen’s weakening against the US dollar,” said Ms. Constantin-Métral. “However, Chinese cities jumped in the ranking, including Shanghai, Beijing, and Shenzhen, due to the strengthening of the Chinese yuan.”

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.

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