The world’s most expensive cities for expats

As stated in the Mercer’s 25th Annual Cost of Living Survey, “multinationals’ focus on mobility as a workforce strategy supports career growth and global competitiveness”.

Mercer release this report annually with the aim of helping multinational organizations to compensate workers fairly when placing them on international assignments.

This is an important consideration for many expat workers (contractors in particular) as, in many cases, they will select their assignments based on their total net earnings once the project is completed.

This means that, in addition to local taxes, the cost of living in the project location must be taken into consideration.

The top 10 most expensive cities for expats

Below is the current list for the 10 most expensive cities for expats, in brackets is the change from the previous year’s survey.

  1. Hong Kong, Hong Kong (0)
  2. Tokyo, Japan (0)
  3. Singapore, Singapore (+1)
  4. Seoul, South Korea (+1)
  5. Zurich, Switzerland (-2)
  6. Shanghai, China (+1)
  7. Ashgabat, Turkmenistan (+36)
  8. Beijing, China (+1)
  9. New York City, U.S. (+4)
  10. Shenzen, China (+2)

For the full list of 209 cities, please click here.

What were the most significant changes?

When comparing the 2018 and 2019 lists, two things are immediately apparent. This first is the extraordinary rise of Ashgabat, which jumped 36 places, and the other is the rise of Asian cities, which now comprise eight of the top ten, up from six in last year’s survey.

The rise of Asian cities was largely due to “high costs for expatriate consumer goods and a dynamic housing market”. While Ashgabat, Turkmenistan’s capital, rose starkly “as a result of a shortage of currency and imported goods driving up prices”, according to the study.

In addition to the increased presence on Asian cities in the top 10, several cities in the United States climbed in the rankings, potentially due to the dollar’s strength at the time the list was compiled.

New York rose four places to break into the top 10, while San Francisco and Los Angeles took 16th and 18th place respectively.

Conversely, many European cities dropped down the rankings. This was likely due to local currencies’ decline against the dollar, escalating trade wars, and Brexit unease.

London slipped four spots to take 23rd place, Paris came in 47th, and the German cities Berlin, Dusseldorf and Stuttgart all fell significantly (to 81, 921 and 126 respectively).

How is the list compiled?

The survey includes over 500 cities throughout the world, and this year’s ranking includes 209 cities across five continents.

The survey measures the comparative cost of more than 200 items in each location, including housing, transportation, food, clothing, household goods, and entertainment.

New York City is used as the base for all comparisons, and currency movements are measured against the U.S. dollar.

How much for a romantic evening for two?

As we’re publishing this article on St Valentine’s Day, it seems fitting to highlight that Mercer’s survey also examines the comparative cost of a date night for two, in the cities measured in the report.

The infographic below was produced from their findings, and is based on the U.S. dollar cost for two movie tickets, two steak dinners, and two coffees (or precisely one unimaginative date):

Source of graphic: Mercer LLC

What is the key cost of living break down?

When looking at the prices of key goods in the world’s most expensive cities, it becomes apparent that there is great variability.

For example Hong Kong, which tops the list across the average of all factors, doesn’t even make the top 10 for the cost of a bottle of beer.

Source of graphic: Bloomberg.

What does this mean for international workers?

As is stated at the start of the report “in a rapidly changing world, mobility programs have become a core component of multinational organizations’ global talent strategy.”

Ilya Bonic, President of Mercer’s Career business, goes further “in a skill-focused economy driven by digital disruption and the need for a globally connected workforce, deploying expatriate employees is an increasingly important aspect of a competitive business strategy for global companies.”

As a result of all of this, multinational organizations are carefully assessing the cost of expatriate packages for their international assignees.

For those companies to attract the best talent to their projects they must offer “fair and competitive compensation packages”.

Therefore it is in the companies’ best interests to carefully consider the structure under which these international workers will be paid.

The structure should be chosen after a careful assessment of the needs of the client company (as well as any other relevant companies in the supply chain) as well as individual needs of the workers on site.

Often overlooked in these situations are the specific legal and payroll compliance restrictions to which the employment structure must adhere.

If you have any questions about an upcoming project, please get in touch to discuss the most effective and efficient methods available.

About Casterrian

Casterrian IT Consulting helps businesses to expand their horizons by improving their IT infrastructure, ensuring that their systems are perfectly suited to their needs now, and flexible enough to adapt if those needs change.

Disclaimer: This article is a marketing communication and should not be considered as legal advice. This document is a general communication being provided for informational purposes only.