Hong Kong is now the third most expensive location in Asia for expatriate workers to live, and sixth most expensive in the world. This was one of the findings of the latest Cost of Living survey published by ECA International, the world's leading provider of knowledge, information and software for the management and assignment of employees around the world.
“Hong Kong’s place in the rankings has remained stable this year with the city continuing to be the sixth most expensive location in the world for expatriates” said Lee Quane, Regional Director — Asia for ECA International. “Despite the ongoing socio-political upheavals and the fact that the economy is in recession, we have yet to see a real impact in the cost of living in the city. Indeed, Hong Kong has only been overtaken by Tokyo due to the strong performance of the Japanese yen throughout 2019, which has moved many Japanese cities up the rankings. Furthermore, we expect prices in Japan to increase further owing to the recent increase in consumption tax while next year’s Olympics in Tokyo are likely to have further inflationary effects. As such, we expect Tokyo to remain above Hong Kong into 2020.”
ECA International has been conducting research into cost of living for more than 45 years. It carries out two main surveys per year to help companies calculate cost of living allowances so that their employees' spending power is protected while on international assignment. The surveys compare a basket of like-for-like consumer goods and services commonly purchased by assignees in over 480 locations worldwide. Certain living costs, such as accommodation rental, utilities, car purchases and school fees are usually covered by separate allowances. Data for these costs are collected separately and are not included in ECA’s cost of living basket.
In spite of the impact of Swine Flu on pork prices, many Chinese cities surveyed by ECA have fallen slightly in the rankings. This is mainly due to weakness of the yuan against major currencies in the past 12 months, “While rising pork prices have pushed up costs for many Chinese households in the past 12 months, the impact on cost of living for expatriates in Chinese cities versus their peers elsewhere has been limited as pork tends to be less popular among most expatriates and because of the weakness of the currency” advises Quane.
Macau has bucked the trend in the greater China region as it continues to move up the rankings from 25 last year to 18, whilst Taipei, Taiwan’s most expensive city, has remained static at 31.
Thai cities continue to be among the biggest risers in the cost of living rankings, with Bangkok rising 43 places and entering the top 50 most expensive locations for the first time at 47th place.
Quane said “Bangkok, long seen as a cheap destination for holidaymakers and expatriates alike, has seen a huge jump in its rankings, moving the most out of all Asian cities surveyed. This is largely the consequence of a strong Thai baht. We have seen Thai cities moving significantly up the rankings over the past few years; Bangkok has moved up 75 places in the last two years alone and Chiang Mai has moved up 56 places in the same period.”
With the Singapore dollar continuing to perform strongly, Singapore has risen in the rankings for a second year running, moving up 5 places to become the 13th most expensive location in the world.
“Despite low inflation and weakening global trade growth Singapore has risen five places to be the 13th most expensive city in the world thanks to the continued strength of the Singapore dollar. Singapore is now more expensive for expatriates than Seoul and Shanghai,” explained Quane.
Ashgabat, capital city of the Central Asian nation of Turkmenistan, remains the most expensive city in the world for expats for a second year running according to ECA’s survey. The city rocketed up from 146th in 2017 and has remained at the top spot since due to a combination of high inflation and a black market currency rate far weaker than the official exchange rate making purchases particularly expensive for expatriates in their home currency unless they can access the illegal black market exchange rate.
“Future relative living costs in Turkmenistan could potentially follow the same trajectory we are currently seeing in Angola,” says Quane. “The once booming oil-based economy of the Angolan capital, Luanda, which topped the rankings in 2017’s Cost of Living Survey has continued to fall, dropping 50 places to 92. Much like Turkmenistan’s declining gas exports a decline in oil production in the country as prices fell after 2014 has contributed to a fall in the value of the kwanza, which despite high inflation has resulted in cheaper living costs for expatriates. With the currency devaluing again since the September survey, Luanda is set to fall even further down the rankings by the next survey.”
Elsewhere in Africa, Harare has seen the biggest drop in ranking, falling 159 places in a single year to 206th place. In June the government reintroduced the Zimbabwe dollar and banned foreign currency being used as legal tender in June this year in the hope that this would stabilise the economy. Unfortunately, the currency lost half of its value against the euro in the three months to the September survey period and inflation has continued to soar.
Middle Eastern countries have generally continued to see an increase in the cost of living, due to the strength of their currencies, many of which are tied to the US dollar. Living costs for expatriates have particularly risen in Israeli cities with Tel Aviv entering the top 10 for the first time in 9th place and Jerusalem sitting not far behind at 12th.
Apart from Swiss cities which continue to dominate the top 10 worldwide, most European cities have fallen in the rankings since last year. Continued uncertainty over Brexit has seen London drop to 140th place, the lowest position it has occupied since ECA began producing cost of living rankings in 2005. Uncertainty over Brexit was at its peak in September, with the prospect of a No-deal exit looming, when the survey was carried out meaning the British pound was particularly weak against the euro and US dollar. Many European cities have dropped out of the top 100 since last year.
Quane explained “With Germany narrowly avoiding recession amid weak global demand, due to the effects of the US trade war with China and Brexit uncertainty, both Berlin and Munich have dropped out of the top 100. With the Eurozone’s largest economy in the dumps, most Eurozone countries have seen a slight drop in the Cost of Living for expatriates due to the relative weakness of the euro.”
US cities have risen across the board for the second year running, as the strong performance of the US dollar continues. New York re-entered the top 20 most expensive locations for the first time since 2015, moving up to 15th from 24th last year. Honolulu also entered the top 20 in 20th place, overtaking cities previously in the top 20 including Copenhagen and Shanghai.