According to ECA International, Tokyo is the most expensive city in the world...

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The most expensive cities in
the world, Asia and Europe

Research by ECA International

1 July 2012: Tokyo remains the most expensive city in the world according to new research by human resources consultants ECA International. Oslo is ranked second, while Karachi is said to be the least expensive city. The Swiss cities of Zurich and Geneva occupy places three and five in the ranking. The top four costliest cities in Asia are all Japanese, with the Korean capital Seoul placed fifth. In Europe, Norwegian and Swiss cities are to be avoided by the budget conscious.

• Research limitations
• The 10 most expensive cities by Mercer, UBS and ECA
• ECA’s global highlights
• ECA’s most expensive cities in the world
• ECA’s most expensive cities in Europe
• ECA’s most expensive cities in Asia
• ECA methodology
• Mercer’s most expensive cities in the world
• UBS’ most expensive cities in the world

The ECA report is the third cost-of-living report published since the summer 2011. Similar research was carried out by consultants Mercer, the Swiss Bank UBS and the Economist Intelligence Unit. Mercer also puts Tokyo at the top of the world’s costliest city, while UBS puts Oslo at the top of the table. ECA insists that Luanda, which it placed at the top two years ago, was falling rapidly down the table to this year’s rank 11. Tokyo, Zurich and Geneva feature in the top ten of all four studies, which also place US cities lower than twelve month ago but largely due to the depreciation of the US dollar against many major currencies.

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Research limitations
The reports are published for the benefit of global companies who use the data to award appropriate remuneration packages to their overseas operatives. Most of the research is carried out locally and the raw findings are later translated 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 three surveys, the cost of living in European cities becomes more expensive if the dollar weakens even when local prices remain unchanged.

The 10 most expensive cities
according to Mercer, UBS, ECA and EIU
Mercer (2013)
UBS (2012)
ECA (2012)
EIU (2013)
Luanda Oslo Tokyo Tokyo
Moscow Zurich Oslo Osaka
Tokyo Tokyo Geneva Sydney
N’Djamena Geneva Nagoya Oslo
Singapore Copenhagen Zurich Melbourne
Hong Kong New York City Yokohama Singapore
Geneva Luxembourg Bern Zurich
Zurich Stockholm Stavanger Paris
Bern Caracas Basel Caracas
Sydney London Kobe Geneva
The fundamental flaw of all cost-of-living 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. In surveys by ECA, UBS, Mercer and EIU 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. Probably the most useful figures are those by UBS because the also examine income and purchasing power. The research by ECA, Mercer and EIU is for the benefit of US employees sent abroad by their companies.

ECA’s global highlights
Caracas (13) continues to be the most expensive location for international assignees in the region. The Venezuelan capital is followed by Rio de Janeiro, placed 22 globally, and Sao Paolo in 29th position. Vancouver, placed 43rd globally, is the most costly location in North America. New York's Manhattan is in 46th position, down from last year's 28th place. Locations across the United States have seen some of the biggest falls in the global ranking, largely due to the depreciation of the US dollar against many major currencies.

For the third year running, Oslo is the most expensive location in Europe. Globally, the Norwegian capital has risen from 6th to 2nd place. Oslo is followed by Geneva and Zurich in Switzerland. Despite the value of the Swiss franc falling against major currencies in the aftermath of the Swiss National Bank's move to set a minimum exchange rate against the euro, Swiss locations remain in the top ten most expensive locations globally.

Despite much turmoil in the eurozone, the euro has strengthened on average against other major currencies over the last year. As a result, locations in the zone have risen in the ranking, while those in the US, for example, and in locations where the currency is pegged to the US dollar, such as Hong Kong, have typically fallen.
Within Europe, Turkish locations have fallen furthest in the ranking. The capital Ankara fell 99 places between surveys, a result of a much weakened Turkish lira against major currencies. Table

Tokyo tops the ranking again, regionally and globally
The Japanese yen has remained strong and Tokyo remains the most expensive location in the region for international assignees. For the second consecutive year, it is also the most costly globally. Singapore, which has moved rapidly up the global ranking to 31st place in recent years, has firmly secured its position among Asia's top ten, moving from 8th to 6th position over the last year. Not only has the Singapore dollar continued to strengthen against major currencies but the actual price of goods and services in ECA's cost of living basket has gone up by around 5.7 per cent on average over the last twelve months. Table

Australian locations continue their rise up the ranking. Sydney has gained another 10 places since last year and is now ranked 15th worldwide. This is in stark contrast to three years ago, when it ranked just 157th. Sydney is followed by Canberra (17th) and Melbourne (23rd). On average, the rate of increase in the prices of goods and services in ECA's basket has almost doubled in Australia over the year. This, coupled with the impact of the strong Australian dollar, has contributed to the cities' rise up the ranking.

Africa and the Middle East
Having fallen from most expensive location globally to 2nd place last year, Angola's capital, Luanda, continues to fall down the ranking. It is currently in 11th position but remains the most expensive location in Africa. Many items typically purchased by assignees in Luanda have to be imported into a country where the infrastructure remains severely damaged after years of war and as a consequence are very expensive. Alexandria in Egypt, ranked 235th, is the least expensive.

Overall, locations across the Middle East have fallen in the ranking. Israeli locations are by far the most expensive locations for expatriates in the region. Tel Aviv is in 32nd place globally, down 14 places from a year ago. In contrast, Dubai is ranked 180th while Jeddah, in 232nd position, is the least costly location surveyed in the region.

About ECA's cost of living survey
ECA International's cost of living indices were calculated based on research carried out in September 2011 using a basket of day-to-day goods and services. The data used refers to year-on-year movements between ECA's September 2011 and 2010 surveys.

The survey covers:
Food: Groceries; dairy produce; meat and fish; fresh fruit and vegetables
Basic: Drink and tobacco; miscellaneous goods; services
General: Clothing; electrical goods; motoring; meals out
Certain living costs such as accommodation, utilities (electricity, gas, water costs), car purchase 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.

Related research

UBS survey (2012): Most expensiv and richeste cities (Intro) | World's most expensive cities (table) | Richest cities by personal earnings (table) | Richest cities by purchasing power (table | The iPod index |

ECA International survey (2012): Introduction | Table: World | Table: Europe | Table: Asia |

Mercer survey (2013): Most expensive cities

EIU survey (2013): Most expensive cities

Introduction | 150 richest cities in 2005 | 150 richest cities in 2020 | Europe's richest cities |

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