- Hong Kong is the world’s second-most expensive location for expatriates – its highest position since ECA’s rankings began
- Macau climbs 17 places in APAC rankings this year – now more expensive than Guangzhou and Shenzhen for expats
- Luanda, Angola now the world’s most expensive location for expats
Hong Kong is the Asia Pacific region’s most expensive location for expatriates and the second-most expensive on a global scale. 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.
To ensure that an employee’s spending power is maintained when they are sent on international assignment, a cost of living allowance is often provided as part of the pay package. This allowance will be affected by differences in prices as well as exchange rate movements between that employee’s home and host countries.
Hong Kong is up one place from second position in the regional rankings. From a global perspective, it has climbed seven places to become the second-most expensive location for expatriates – its highest ever rankings on both fronts. Since 2011, Hong Kong has risen steadily in both the regional and global rankings.
Hong Kong has continued to get more expensive for expatriates. Over the past few years, the HK dollar has appreciated against most major currencies, owing to its peg to the US dollar, which has pushed up the price of goods and services relative to those in locations whose currencies have weakened against the greenback. For companies who send staff into Hong Kong and provide cost of living allowances to protect their purchasing power, they will likely need to increase them to ensure that their employees’ buying power remains protected.
ECA International has been conducting research into cost of living for over 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 not compromised while on international assignment. The surveys compare a basket of like-for-like consumer goods and services commonly purchased by assignees in over 460 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.
Asia Pacific highlights – Hong Kong overtakes Tokyo for regional top spot
In Japan, Tokyo has fallen by one place to second-most expensive location in Asia. All other ranked locations in Japan maintained their positions in the regional rankings. On a global scale, there has been some movement – other than Tokyo (retaining 7th position globally), all other ranked Japanese cities have fallen by four places, with Yokohama (16th), Nagoya (17th) and Osaka (18th).
"Prices in Japan have remained stable over the past year. The yen, on the other hand, has weakened against most major currencies, contributing to the decline of Japanese cities in our rankings,” explained Quane. “This means that for many companies, the cost of maintaining their assignees' purchasing power while posted here has fallen and international assignees based in Japan may see their cost of living allowances decrease.”
Macau has climbed both the regional and global rankings this year, approaching the regional top ten and now making the global top 25. It ranks 11th in Asia Pacific and 25th in the world. Since 2012, it has risen by 17 places in the regional rankings – the third-highest climber in Asia Pacific over this period.
“Prices have risen faster in Macau than elsewhere in the Greater China region in the last 12 months,” said Quane. “Furthermore, the strength of the currency owing to its peg to the strong Hong Kong dollar has also contributed to Macau becoming the second-most expensive location in the Pearl River Delta, overtaking Guangzhou and Shenzhen.”
Shanghai remains the most expensive city in mainland China but has fallen in the global rankings to the 13th most expensive location. All other first-tier Chinese cities have seen more significant declines in both ECA’s regional and global rankings – Beijing is now 20th globally, Guangzhou 27th and Shenzhen 32nd. Within China, all ranked mainland Chinese locations have fallen in our regional and global rankings this year.
“Although the Chinese yuan has retained its relative strength against some major currencies, it has continued to depreciate against the US dollar. This means that assignees from the United States can expect to see lower cost of living allowances. Inflation has increased marginally during the past 12 months, with higher fuel prices making significant contributions to this trend,” stated Quane.
Singapore has remained relatively stationary in the Asia Pacific regional rankings – unmoved in the past 12 months. However, it has fallen by six places to 24th on the global stage.
Elsewhere, Taiwanese cities have been the highest climbers in the regional rankings, with Kaohsiung rising the most in the region from 31st to 18th this year. Ulaanbaatar, Mongolia, remains the cheapest location in the region followed by cities in Malaysia and Myanmar.
“Much of the movement in the rankings amongst Asian locations in the past 12 months has been strongly influenced by currency movements,” added Quane. “Yangon has fallen in the regional rankings on account of depreciation of its currency in the past year while the continued weakness of the Malaysian ringgit is responsible for Johor Bahru’s status as the location with the second-lowest cost of living in the region.”
Sydney remains the most expensive city in Australia. It currently ranks 50th in the global rankings, up from 70th place last year. All ranked locations within Australia rose in our global rankings this year, with Adelaide rising the most, by 34 places to 75th position – although it is still the cheapest ranked location in Australia.
Global highlights – Luanda tops the global rankings of most expensive cities for expatriates, Buenos Aires significantly rises & Central London falls
Luanda has risen from 8th position last year to top ECA’s global rankings this year.
“The cost of goods typically purchased by international assignees in Luanda, which were already high due to poor infrastructure and high oil-fuelled demand, have been pushed much higher in the last year. The Angolan kwanza is increasingly overvalued, which pushes up relative costs; while the continued weakness of the black-market exchange rate has also inflated the price of imported goods,” added Quane.
Buenos Aires, the Argentine capital, ranks 35th globally this year, in sharp contrast to 2016 when it was 163rd. It has risen by 128 places in the global rankings in the past year, mainly because of soaring inflation, and is the second-highest climber this survey, behind Caracas.
Central London is the 132nd most expensive location in the world for expatriates, down 67 places from last year – falling out of the top 100 most expensive cities in the world. London is now cheaper than Bangkok, Rio de Janeiro and Buenos Aires, as well as its European rivals Paris, Berlin and Brussels, thanks to the weak pound.
Global top 10 most expensive locations for expatriates
||Global ranking 2017
About ECA's Cost of Living Survey
ECA International's Cost of Living surveys are carried out in March and September using a basket of day-to-day goods and services commonly purchased by assignees. The data used above refers to year-on-year movements between ECA's March 2012 to 2017 surveys. ECA’s Cost of Living Survey rankings began in 2005.
Cost of living indices are used by ECA clients to calculate cost of living allowances for assignees. The survey covers:
Food: Groceries; dairy produce; meat and fish; fresh fruit and vegetables
Basic: Household goods; recreational goods; general services; leisure services
General: Clothing; electrical goods; motoring; meals out; alcohol and tobacco
Certain living costs such as accommodation rental, utilities charges (electricity, gas, and water), car purchases and school fees are not included in the survey. Such items can make a significant difference to expenses but are usually compensated for separately in expatriate packages.
This comparison of cost of living was calculated on a base composed of various developed countries and is used to reflect an international lifestyle. Other indices available from ECA reflect specific city-to-city comparisons and different levels of shopping efficiency.
ECA's blog provides updates and commentary on currency, inflation and expatriate cost of living. Follow the blog here: https://eca-international.com/insights/blog