Asia continues to dominate list of most expensive cities in the world, Mercer’s 2020 Cost of Living Survey finds

The annual survey helps employers reassess global mobility programs amid uncertainty from pandemic

 

June 9, 2020 

ASEAN, ASEAN

 

  • Hong Kong retains top spot for the third consecutive year, while Singapore is in fifth, down two places from last year.
  • Ashgabat, Turkmenistan overtakes Tokyo, Japan in second position, with the latter now in third
  • Shanghai ranked seventh, down from sixth last year while Beijing is in 10th, down two places from last year.

 

According to Mercer’s 2020 Cost of Living Survey, six of the top 10 cities in this year’s ranking are in Asia. Hong Kong retained its spot for the third consecutive year as the most expensive city for expatriates both in Asia and globally due to currency movements measured against the US dollar, driving up the cost of living locally.  

 

The global financial center is followed by Ashgabat, Turkmenistan which overtook Tokyo, now ranked third. Singapore is in fifth, down from two places last year while Shanghai and Beijing are sixth and 10th respectively.

 

Other cities in the top 10 costliest cities for expatriates are Zurich (4), New York (6), Bern (8) and Geneva (9).

 

The survey saw a dip in rankings across Chinese cities due to the currency depreciation against the US dollar. The most notable drop was for Shenyang, down 18 places from last year, ranking at 63. Currency appreciation and price increases for goods and services saw Southeast Asian cities like Manila and Jakarta climb in rankings this year. Manila (80) is up 29 spots from last year, while Jakarta (86) climbed 19 places. Mumbai (60) is India’s most expensive city while Kolkata (185) is the least expensive Indian city ranked.

 

Renee McGowan, CEO Mercer Asia, said, “The COVID-19 pandemic has posed complex challenges to businesses and the Asian Development Bank estimates global economic impact to be between US$5.8 trillion and US$ 8.8 trillion this year. The situation remains fluid and uncertain; organizations need to plan, observe and be agile in their response and more importantly, keep their global workforce engaged throughout. As countries in Asia now begin to review the travel restrictions that have been put in place, companies will have to further assess its impact on employee mobility and their strategies.”

 

Mercer's Cost of Living Survey is one of the world’s most comprehensive, and is designed to help multinational companies and governments determine compensation strategies for their expatriate employees. New York City is used as the base city for all comparisons and currency movements are measured against the US dollar. The survey includes over 400 cities throughout the world; this year’s ranking includes 209 cities across five continents and measures the comparative cost of more than 200 items in each location, including housing, transportation, food, clothing, household goods, and entertainment. Data for this year’s survey was collected in March; price variances in many locations were not significant due to the pandemic[1].

 

Organizations Reassess Global Mobility Programs

 

The COVID-19 pandemic has spurred organizations to reassess their global mobility programs with a focus on the well-being of their expatriate employees. As they leverage new working arrangements, changing technology, and adaptive ways of thinking, organizations are considering alternate forms of international assignments in addition to traditional mobility programs to sustain their overseas operations and workforces.

 

Reductions in staff and salaries as well as changes to benefit programs have challenged overseas expansion strategies, despite an appetite to grow and scale globally while navigating the uncharted waters of a health and economic crisis.

 

As organizations re-examine talent portfolios, mobility programs, and remuneration packages, accurate and transparent data is essential to compensate fairly for all types of mobility assignments, taking into account changes resulting from the current pandemic and subsequent market volatility.

 

Mercer’s 26th annual Cost of Living Survey finds that specific factors such as currency fluctuations, cost inflation for goods and services, and instability of accommodation prices, are essential to determining the cost of expatriate packages for employees on international assignments.

 

“The COVID-19 pandemic reminds us that sending and keeping employees on international assignments is a huge responsibility and a difficult task to manage,” said Ilya Bonic, Career President and Head of Mercer Strategy. “Rather than bet on a dramatic resurgence of mobility, organizations should prepare for the redeployment of their mobile workforces, leading with empathy and understanding that not all expatriates will be ready or willing to go abroad.”

 

In the short-term, preparation for this new approach to global mobility may involve re-relocating assignees who have been repatriated. In the medium-term, the priority will be about realigning the mobile workforce with new economic models centered on shortened supply chains, more regional moves and a renewed need to train talent. In addition to these concerns, relevant information about the cost and location of assignments worldwide will be a critical factor post-crisis.

 

“Border closings, flight interruptions, mandatory confinements, and other short-term disruptions have affected not only the cost of goods and services, but also the quality of living of assignees,” said Mr. Bonic. “Climate change, issues related to environmental footprint, and health system challenges have pushed multinationals to consider how a city’s efforts around sustainability can impact the living conditions for their expatriate workers. Cities with a strong sustainability focus can greatly improve living standards, which can in turn improve employee well-being and engagement.”

 

Properly vetting locations and compensating employees on international assignments is as important as it can be costly. Mercer’s survey shows that costs of goods and services shift with inflation and currency volatility, making overseas assignment costs sometimes greater and sometimes smaller.

 

“Sudden changes to exchange rates has been mainly driven by the impact COVID-19 is having on the global economy,” said Yvonne Traber, Global Mobility Product Solutions Leader at Mercer. “This volatility can affect mobile employees in a variety of ways, from shortages and price adjustments for goods and services, to supply chain disruptions or when employees are paid in home country currency and need to exchange funds into the host country for local purchases.”

 

Rankings for Other Regions

 

The Americas

 

While the global economic downturn took hold during the first part of the year, the strength of the dollar drove up costs for expatriates in US cities. As a result, cities in the United States have climbed in this year’s ranking of most costly cities. New York (6) is the highest-ranked city in the country followed by San Francisco (16) Los Angeles (17) Honolulu (28) and Chicago (30). Winston Salem, North Carolina (132) remains the least expensive US city surveyed for expatriates.

 

In South America, San Juan (66) ranks as the costliest city, followed by Port of Spain (73), San Jose (78) and Montevideo (88). Managua (198) is the least expensive city in South America. Caracas in Venezuela is excluded from the ranking due to the complex currency situation; its ranking would have varied greatly depending on the official exchange rate selected.

 

The Canadian dollar has appreciated in value, triggering jumps in this year’s ranking. Up eighteen places from last year, Vancouver (94) is the most expensive Canadian city in the ranking, followed by Toronto (98). Ranking 151, Ottawa is the least expensive city in Canada.

 

Europe, the Middle East, and Africa

 

Three European cities are among the top 10 list of most expensive locations. At number four in the global ranking, Zurich remains the most costly European city, followed by Bern (8), up four spots from last year. The next European city in the ranking, Geneva (9), is up four places from last year. 

 

Despite some low price increases across the region, several local currencies in Europe have weakened against the US dollar, pushing many cities down in the ranking. As France and Italy's economies shrank at the end of 2019, Eurozone growth came close to zero. Yet, there are no signs of crisis when it comes to inflation in any of the leading EU countries. The region saw cities like Paris (50), Milan (47) and Frankfurt (76) drop in this year’s ranking.

 

A decision by the United Kingdom to leave the European Union has not impacted its local currency which remains strong, gaining value to all major global currencies. London (19), Birmingham (129) and Belfast (149) jumped four, six, and nine places, respectively.

 

The United Arab Emirates continue to diversify the economy, subsequently reducing the impact of oil industry on GDP. With this ongoing process, there has been negative price movement in both Dubai and Abu Dhabi. Just like UEA, Saudi Arabia is seeking to limit the impact of oil exports and move to a more diversified economic model. Prices have remained stable over the course of the last six months; however, with the upcoming value-added tax increase there is an expectation to see prices change. Tel Aviv (12) continues to be the most expensive city in the Middle East for expatriates, followed by Dubai (23), Riyadh (31), and Abu Dhabi (39). Cairo (126) remains the least expensive city in the region despite rising forty places.

 

Ndjamena, Chad (15) is the highest ranked city in Africa while Tunis (209) in Tunisia ranks as the least expensive city in the region and globally.

 

Pacific

 

Australian cities have fallen in the ranking this year as the local currency has depreciated against the US dollar. Sydney (66), Australia’s most expensive ranked city for expatriates, experienced a drop of sixteen places. The least expensive city in the region, Adelaide fell seventeen places to rank 126.

 

Mercer produces individual cost of living and rental accommodation cost reports for each city surveyed. For more information on city rankings, visit https://bit.ly/3c9EzFN. To purchase copies of individual city reports, visit https://mobilityexchange.mercer.com/multinational-approach-cost-of-living-data.

 

Notes for editors

 

The figures for Mercer’s cost of living and rental accommodation cost comparisons are derived from a survey conducted in March 2020. Exchange rates from that time and Mercer’s international basket of goods and services from its Cost of Living Survey have been used as base measurements.

 

Governments and major companies use data from this survey to protect the purchasing power of their employees when transferred abroad; rental accommodation costs data is used to assess local expatriate housing allowances. The choice of cities surveyed is based on demand for data.

 

About Mercer

Mercer believes in building brighter futures by redefining the world of work, reshaping retirement and investment outcomes, and unlocking real health and well-being. Mercer’s more than 25,000 employees are based in 44 countries and the firm operates in over 130 countries. Mercer is a business of Marsh & McLennan (NYSE: MMC), the world’s leading professional services firm in the areas of risk, strategy and people, with 76,000 colleagues and annual revenue of $17 billion. Through its market-leading businesses including Marsh, Guy Carpenter and Oliver Wyman, Marsh & McLennan helps clients navigate an increasingly dynamic and complex environment. For more information, visit www.mercer.com. Follow Mercer on Twitter @Mercer.

 

[1] Due to timing of the COVID-19 outbreak, Mercer conducted further analysis on availability of goods in April and May to verify pricing.

 

Mercer Cost of Living Survey – Worldwide Rankings 2020
(The Mercer international basket, including rental accommodation costs)
 

Rank as of March City Country/Region
2019 2020
1 1 HONG KONG HONG KONG (SAR)
7 2 ASHGABAT

TURKMENISTAN

2 3 TOKYO JAPAN
5 4 ZURICH SWITZERLAND
3 5 SINGAPORE SINGAPORE
9 6 NEW YORK CITY UNITED STATES
6 7 SHANGHAI CHINA
12 8 BERN SWITZERLAND
13 9 GENEVA SWITZERLAND
8 10 BEIJING CHINA
4 11 SEOUL SOUTH KOREA
15 12 TEL AVIV ISRAEL
10 13 SHENZHEN CHINA
14 14 VICTORIA SEYCHELLES
11 15 NDJAMENA CHAD
16 16 SAN FRANCISCO UNITED STATES
18 17 LOS ANGELES UNITED STATES
25 18 LAGOS NIGERIA
23 19 LONDON UNITED KINGDOM
17 20 GUANGZHOU CHINA
27 21 MOSCOW RUSSIA
19 22 OSAKA JAPAN
21 23 DUBAI UNITED ARAB EMIRATES
22 24 KINSHASA DEM. REP. OF THE CONGO
20 25 COPENHAGEN DENMARK
33 26 NAGOYA JAPAN
47 26 DHAKA BANGLADESH
35 28 TAIPEI TAIWAN
38 28 HONOLULU UNITED STATES
37 30 CHICAGO UNITED STATES
35 31 RIYADH SAUDI ARABIA
42 32 WASHINGTON UNITED STATES
24 33 LIBREVILLE GABON
27 34 NANJING CHINA
40 35 BANGKOK THAILAND
30 36 ADIDJAN CÔTE D'IVOIRE
44 37 MIAMI UNITED STATES
32 38 TIANJIN CHINA
33 39 ABU DHABI UNITED ARAB EMIRATES
30 40 CHENGDU CHINA
49 41 BOSTON UNITED STATES
29 42 NOUMEA NEW CALEDONIA
41 43 QINGDAO CHINA
39 44 BRAZZAVILLE CONGO
53 45 BEIRUT LEBANON
43 46 DUBLIN IRELAND
45 47 MILAN ITALY
56 48 WHITE PLAINS UNITED STATES
54 49 BANGUI CENTRAL AFRICAN REPUBLIC
47 50 PARIS FRANCE
59 51 HOUSTON UNITED STATES
57 52 MANAMA BAHRAIN
62 52 DALLAS UNITED STATES
51 54 VIENNA AUSTRIA
64 55 SEATTLE UNITED STATES
52 56 YAOUNDE CAMEROON
63 57 ACCRA GHANA
59 58 DJIBOUTI DJIBOUTI
75 59 ST. PETERSBURG RUSSIA
67 60 MUMBAI INDIA
69 60 ATLANTA UNITED STATES
70 62 MORRISTOWN UNITED STATES
45 63 SHENYANG CHINA
58 64 AMSTERDAM NETHERLANDS
55 65 ROME ITALY
50 66 SYDNEY AUSTRALIA
72 66 SAN JUAN PUERTO RICO
85 68 ABUJA NIGERIA
78 69 MINNEAPOLIS UNITED STATES
66 70 DOUALA CAMEROON
75 71 AMM JORDAN
67 72 MUNICH GERMANY
83 73 PORT OF SPAIN TRINIDAD & TOBAGO
65 74 HELSINKI FINLAND
72 75 DAKAR SENEGAL
61 76 OSLO NORWAY
74 76 FRANKFURT GERMANY
77 78 BRUSSELS BELGIUM
131 78 SAN JOSE COSTA RICA
90 80 DETROIT UNITED STATES
109 80 MANILA PHILIPPINES
81 82 BERLIN GERMANY
84 83 LUXEMBOURG LUXEMBOURG
94 83 ST. LOUIS UNITED STATES
117 83 YANGON MYANMAR
105 86 JAKARTA INDONESIA
82 87 MADRID SPAIN
70 88 MONTEVIDEO URUGUAY
88 89 CONAKRY GUINEA
93 90 PANAMA CITY PANAMA
97 91 PITTSBURGH UNITED STATES
107 92 PORTLAND UNITED STATES
106 93 CLEVELAND UNITED STATES
112 94 VANCOUVER CANADA
97 95 NAIROBI KENYA
103 96 MUSCAT OMAN
97 97 PRAGUE CZECH REPUBLIC
115 98 TORONTO CANADA
79 99 MELBOURNE AUSTRALIA
92 100 DUSSELDORF GERMANY
118 101 NEW DELHI INDIA
91 102 BARCELONA SPAIN
89 103 AUCKLAND NEW ZEALAND
87 104 PERTH AUSTRALIA
100 104 JEDDAH SAUDI ARABIA
95 106 LISBON PORTUGAL
100 106 HAMBURG GERMANY
150 106 KIEV UKRAINE
108 109 PHNOM PENH CAMBODIA
115 109 DOHA QATAR
120 111 HO CHI MINH CITY VIETNAM
121 112 LIMA PERU
111 113 RIGA LATVIA
119 113 KUWAIT CITY KUWAIT
26 115 LUANDA ANGOLA
112 116 HANOI VIETNAM
149 116 NIAMEY NIGER
96 118 CANBERRA AUSTRALIA
102 118 BANDAR SERI BEGAWAN BRUNEI
144 120 MEXICO CITY MEXICO
128 121 CASABLANCA MOROCCO
136 122 GUATEMALA CITY GUATEMALA
114 123 WELLINGTON NEW ZEALAND
123 123 LYON FRANCE
133 123 HAVANA CUBA
103 126 BRISBANE AUSTRALIA
109 126 ADELAIDE AUSTRALIA
166 126 CAIRO EGYPT
135 129 BIRMINGHAM UNITED KINGDOM
86 130 SAO PAULO BRAZIL
126 130 STUTTGART GERMANY
138 132 WINSTON SALEM UNITED STATES
127 133 STOCKHOLM SWEDEN
79 134 SANTIAGO CHILE
125 134 POINTE A PITRE GUADELOUPE
137 134 ABERDEEN UNITED KINGDOM
139 137 MONTREAL CANADA
128 138 ATHENS GREECE
131 139 BRATISLAVA SLOVAKIA
128 140 COTONOU BENIN
145 141 GLASGOW UNITED KINGDOM
124 142 BAMAKO MALI
154 143 CHENNAI INDIA
141 144 KUALA LUMPUR MALAYSIA
148 145 QUITO ECUADOR
140 146 TALLINN ESTONIA
153 146 CALGARY CANADA
142 148 LJUBLJANA SLOVENIA
158 149 BELFAST UNITED KINGDOM
157 150 KINGSTON JAMAICA
161 151 OTTAWA CANADA
143 152 ZAGREB CROATIA
133 153 BUENOS AIRES ARGENTINA
145 154 LOME TOGO
151 155 NUREMBERG GERMANY
154 156 ISTANBUL TURKEY
152 157 VILNIUS LITHUANIA
156 158 LEIPZIG GERMANY
160 159 RABAT MOROCCO
121 160 RIO DE JANEIRO BRAZIL
159 161 MAPUTO MOZAMBIQUE
145 162 OUAGADOUGOU BURKINA FASO
166 163 TIRANA ALBANIA
171 163 DAR ES SALAAM TANZANIA
188 165 HARARE ZIMBABWE
161 166 LIMASSOL CYPRUS
169 167 SANTO DOMINGO DOMINICAN REPUBLIC
166 168 SAN SALVADOR EL SALVADOR
173 169 WARSAW POLAND
164 170 BUDAPEST HUNGARY
179 171 BENGALURU INDIA
178 172 BAKU AZERBAIJAN
161 173 PORT LOUIS MAURITIUS
176 174 BUCHAREST ROMANIA
165 175 PORT AU PRINCE HAITI
175 176 KIGALI RWANDA
182 177 COLOMBO SRI LANKA
183 177 KAMPALA UGANDA
187 177 MONTERREY MEXICO
177 180 SOFIA BULGARIA
170 181 BOGOTA COLOMBIA
171 182 ADDIS ABABA ETHIOPIA
181 183 BELGRADE SERBIA
192 184 NOUAKCHOTT MAURITANIA
189 185 KOLKATA INDIA
193 185 BLANTYRE MALAWI
180 187 CAPE TOWN SOUTH AFRICA
186 188 ASUNCION PARAGUAY
191 189 ALMATY KAZAKHSTAN
174 190 BRASILIA BRAZIL
197 191 YEREVAN ARMENIA
185 192 JOHANNESBURG SOUTH AFRICA
195 193 LA PAZ BOLIVIA
184 194 ALGIERS ALGERIA
198 194 MINSK BELARUS
199 196 TEGUCIGALPA HONDURAS
194 197 SARAJEVO BOSNIA AND HERZEGOVINA
200 198 MANAGUA NICARAGUA
189 199 GABORONE BOTSWANA
203 200 ISLAMABAD PAKISTAN
196 201 LUSAKA ZAMBIA
201 202 SKOPJE NORTH MACEDONIA
202 203 TBILISI GEORGIA
204 204 BANJUL GAMBIA
207 205 KARACHI PAKISTAN
206 206 BISHKEK KYRGYZSTAN
208 206 TASHKENT UZBEKISTAN
204 208 WINDHOEK NAMIBIA
209 209 TUNIS TUNISIA

Source: Mercer’s 2020 Cost of Living Survey

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