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The World's most Expensive Cities
(30/07/2006)
Moscow
has overtaken Tokyo to become the most expensive city in the
world, according to a new study.
The
Russian capital moved up three spots from a year ago thanks to a
recent property boom, according to a survey released Monday,
while the Japanese capital slipped to third place due to the
weaker yen. South Korea's Seoul ranked second on the list, up
from fifth last year.
However,
the major rises have taken place in the Middle East with Dubai
jumping a massive 48 places in the last year alone and 58 places
in the last two years. Abu Dhabi also jumped substantially from
the world’s 64th most expensive city in 2005 to the 30th most
expensive in 2006. This confirms what many UAE residents have
long suspected and reflects the country’s high inflation and 70%
increase in rent along with huge increases in school fees,
petrol.
According
to Mercer Human Resource Consultings' annual report, an
expatriate's money stretches three times further in Asuncion,
Paraguay - the cheapest city. The survey ranks 144 cities around
the world, measuring the comparative cost of more than 200 items
such as housing, transportation and food. The survey is aimed at
helping multinational employers determine compensation for their
expatriate workers.
With
cities around the world getting increasingly expensive for
expatriates (notably cities in developing countries) employers
may need to re-examine the way they provide compensation and
benefits for their workers, said Rebecca Powers, a senior
consultant at Mercer.
"As we
see more and more movement into these emerging markets, a lot of
those programs need to be looked at," Powers said.
Overall,
foreign exchange rate fluctuations were behind the majority of
the changes in ranking, but in Moscow's case, costs were buoyed
by the surging price for large living accommodations. Prices for
big houses rose some 50 percent over the past year, driven in
large part by soaring demand from expatriates, Powers said.
"It
reflects a much bigger demand for palatable housing for someone
coming into Russia trying to replicate the housing they had at
home," she said.
After
Moscow, Europe's priciest cities were London, ranked No. 5
overall, and Geneva, ranked No. 7. European cities tended to
fall in the rankings this year because of a weakening euro.
New York
(ranked No. 10, up three spots from last year) remains North
America's costliest city, followed by Los Angeles and San
Francisco.
Chinese
cities (including Hong Kong at No. 4, Beijing at No. 14, and
Shanghai at No. 20) climbed the list due mostly to the Yuan's
strength after being de-pegged from the U.S. dollar.
With the
Brazilian real rising about 20 percent versus the U.S. dollar
over the past year, Brazilian cities Sao Paolo and Rio de
Janeiro surged to No. 34 and No. 40 from No. 119 and No. 124,
respectively.
"What's
so interesting now is that we do see, year to year, more
fluctuation in these rankings than we used to," Powers said.
"The investment and flow of capital and businesses into
developing countries has made them a bit more expensive."
Companies
will likely have to pay expatriate employees more to retain
them, and may want to consider working harder to hire staff
locally in the long-term to help alleviate relocation costs,
Powers said.
Mercer
said it ranked 144 cities on transport, food, clothing,
household goods and entertainment costs.
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