The most expensive cities in
the world, Asia and Europe
By Tann vom Hove, Editor

17 June 2008: Deciding on which is the world’s most expensive city is a little bit like choosing between the merits of various world heavy weight boxing champions. Until a few years ago the choice was between Tokyo and London. But in its 2007 ‘Worldwide cost of living survey’ the Economist Intelligence Unit (EIU) said four European cities had overtaken Tokyo as the world’s costliest city. However, Mercer Consulting insists Moscow was the most expensive city in the world, with Oslo ranked 10th. Meanwhile, in its March 2008 research, Swiss Bank UBS puts London in first place, followed by Oslo, New York and Tokyo. To make budget planning for international travellers and expatriates even more difficult, ECA’s June 2008 research suggests that Angola’s capital Luanda was the most expensive city in the world.

THE MOST EXPENSIVE CITIES IN THE WORLD
ECA International survey (June 2008): Introduction | Table: World | Table: Europe | Table: Asia |
UBS survey (March 2008): Most expensive cities (Intro) | World's most expensive cities (table) | Richest cities by personal earnings (table) | Richest cities by purchasing power (table |
Mercer survey (July 2008): Most expensive cities
EIU survey (2007): Most expensive cities

RICHEST CITIES BY GDP
Introduction | 150 richest cities in 2005 | 150 richest cities in 2020 | Europe's richest cities |

The basic problem with all four surveys is that they convert local prices into US dollars, which means that any changes are as much the result of currency fluctuations as of price inflation. For example according to all four surveys, the cost of living in cities outside the US dollar zone becomes more expensive if the dollar weakens against local currencies even when prices remain unchanged or indeed fall.

Commenting on the world's most expensive cites


Research by ECA International
Inflation has been seen in most locations worldwide over the past six months, with food and petrol prices, particularly, increasing quite considerably. According to ECA data, China saw pork prices increase by a further 19 per cent between September 2007 and March 2008, while the cost of egg noodles increased by almost 15 per cent in Singapore. Rice in India is now 11 per cent more expensive than 6 months ago while in that same period potatoes have increased 4 per cent in the UK, pasta went up almost 12 per cent in Italy and, in Australia, the price of a bottle of white wine rose 7 per cent. The cost of petrol has gone up more than 13 per cent in Hong Kong and Singapore, and by almost 11 per cent in Australia over the last 6 months. Table

For expatriates, particularly those paying with US dollars, Angola’s capital Luanda is the most expensive city in the world. The cost of living for those hankering after imported food rather than local produce is higher in this African metropolis than in Tokyo, Paris or London. ECA International, which carried out the research, explained that its cost of living survey compared a basket of 128 consumer goods and services commonly purchased by expatriates in over 370 locations worldwide. “Certain items and brands typically purchased by expatriates, can be very expensive in a location such as Luanda where they are not readily available locally.”

The ECA ranking placed Oslo second, followed by Stavenger, another Norwegian city. Denmark's Copenhagen was in fourth place. Moscow ranked fifth. Places six to ten include four Swiss cities – Geneva, Zurich, Basel and Bern – as well as Libreville, Gabon’s capital.

Tokyo (13th overall) is the most expensive city in Asia, overtaking last year’s most expensive Asian location, Seoul, which has fallen to 18th place due, largely, to the appreciation of the Yen against the US dollar over the past six months. Locations, which have moved fastest up the Asian rankings include Manila, Singapore and many second tier cities in China because of a combination of stronger currency and relatively high price increases.

While cities such as Caracas and Buenos Aires have become more expensive due to local price inflation, the cost of living for expatriates and foreigners in other locations has been more affected by the strengthening or weakening of their home currency against host country currencies. “Many locations in Europe, for example, have moved up the ranking due to the appreciation of their currencies,” a ECA director explained. Table

Asia
Tokyo (13) is the most expensive city in Asia, overtaking Seoul (18) due, largely, to the appreciation of the Yen against the US dollar over the past six months. Within the region the locations, which have moved fastest up the rankings in the same period include Manila, Singapore and many second tier cities in China. This is due to a combination of stronger currency and relatively high price increases. Cities in the Korea Republic, Hong Kong and India are among the Asian locations that have fallen the most in the ranking. The weakening of these countries’ currencies between surveys explains these falls. Ulan Baatar (231) remains the cheapest location in Asia. Table

Australasia
All Australian and New Zealand locations in the survey have moved up the ranking. The recent commodity boom in Australia and the ongoing carry trade in New Zealand have led to considerable currency appreciations in these countries. Sydney (59) is the most expensive city on the continent. Adelaide has climbed the fastest up the ranking, rising 30 places to 92nd globally although prices there are on average 10 per cent lower than in Sydney.

Europe
Oslo is Europe’s most expensive city for expatriates and visitors and ranked 2nd globally. The Norwegian capital is followed by Stavanger, Copenhagen, Moscow, Geneva, Zurich, Basel and Bern, which all feature in the top 10 globally. The cheapest locations in Europe include Chisinau (195), Minsk (161) and Skopje (140). Goods and services in the Moldovan capital are almost 60 per cent cheaper than if purchased in Oslo. Locations in Eastern Europe, such as Prague (65), Warsaw (90) and Bratislava (113) have all experienced the largest increases in the rankings, owing to the strengthening of their respective currencies and also relatively high rates of inflation. Regionally it is cities in the UK that have fallen the most in the ranking since September 2007 owing to the weakness of sterling. Both Greater London and Edinburgh fell 27 places in the ranking while Central London moved down 14 places to 24th position. Table

Americas
Manhattan, the most expensive location in the Americas 6 months ago has fallen 29 places – the region’s biggest fall - and sits in 83rd position globally. The continued weakness of the US dollar has led to falls in the ranking for all locations in the USA. This means that despite also falling, Canadian cities such as Toronto (77) and Montreal (80) are now more costly than Manhattan for expatriates. Rio de Janeiro is currently the survey’s most expensive city in the Americas. A strengthening real has made this location more expensive for expatriates in the last six months. La Paz, ranked 234th worldwide, is the region’s cheapest location while Caracas is the region’s biggest mover: inflation there of more than 27 per cent has seen it climb 53 places up the rankings.

Middle East
Tel Aviv has risen the most places within this region, mainly due to the appreciation of the shekel against the US dollar. Ranked 38 globally, it is the most costly location in the Middle East. Goods and services there cost twice as much as they would in Jeddah (219), the least expensive Middle Eastern location in the survey. Doha (182) and Dubai (177) have fallen the most within the region, the pegging of their currencies to the weakened US dollar is largely the reason behind these movements.

Africa
Some of the most expensive locations in the world for expatriates are in Africa with Luanda (Angola), and Libreville (Gabon) featuring in the top 10. Maseru, Lesotho, remains the cheapest location in the survey and is one of 7 African locations in the bottom 10 globally including Durban (236) and Gaborone (Botswana) (235) where the weakness of the Rand and Pula, respectively, have contributed to low cost of living.

Methodology
The research for ECA’s 2008 survey was conducted in March 2008 and is based on a basket of goods and services most commonly purchased by western expatriates. The basket does NOT include items such as accommodation, utility costs, school fees or motoring costs. ECA International is the world’s largest association for human resources (HR) professionals. It was set up in 1971 and includes among its partners companies such as Deutsche Bank, Robert Bosch, Fujitsu Services, Heineken, Philips und Rolls-Royce. The organisation provides remuneration advice and data for internationally operating companies.