African, European, and Asian cities most expensive for expatriates due to currency fluctuations and the impact of inflation on goods and services, finds Mercer survey

5Dubai and Abu Dhabi have been ranked as the 67th and 68th most expensive cities to live (respectively), according to Mercer’s 2014 Cost of Living Survey. Dubai was one of several cities in the region that experienced a jump in their rankings, with the emirate soaring 23 places from last year’s position at 90. Abu Dhabi experienced a less significant rise of 11 places from number its 2013 placement at 79. Beirut tops the regional index for the highest rates of living expenditure incurred by expatriates, coming in at number 63. Riyadh raises 11 places to rank at 111th, while Jeddah continues to rank as the least expensive city in the region, being placed at 175.

The reports’ authors say that the cities that have made significant advances up the table have been pushed up by other locations’ decline, as well as the strong increase for expatriate rental accommodation costs - particularly the case with Abu Dhabi and Dubai.

“Dubai is now on a strong economic hub following the global market depression of 2008 and this renewed economic strength is reflected in an increase in accommodation costs, which is the main reason why the city has jumped so many places in Mercer’s 2014 Cost of Living Survey,” said Nuno Gomes, Principal, Information Solutions Leader Middle East, Mercer.

“The steep rise in rental prices is a phenomenon witnessed over the past 18 months and can be traced to a renewed sense of confidence in the city, particularly in the wake of the Expo 2020 build-up and award. I believe that the situation will stabilise as we start to see more and more of the building projects that have been restarted after being put on hold come on line,” he added.

Most other cities from across the Middle East region have gone up in the 2014 ranking, mainly due to global currency fluctuations. Apart from Dubai, Jeddah is the only other non-capital city in the ranking and is the lowest ranked city from the region. Mahmoud Ghazi, Information Solutions Leader for Saudi Arabia, Mercer says “Jeddah remains a less explored destination for international assignees and expatriates in general, which makes it very affordable. When it comes to Riyadh, despite its rise of 11 places in the ranking, it still remains a relatively cheap location for expatriates. Most consumer-spending is actually quite affordable when comparing to the rest of the region, such as supermarket or food away from home, but the compound type of accommodation keeps Riyadh’s ranking at a higher level,” he added.

Two African cities top the list of most expensive cities for expatriates. Although not typically recognised as wealthy cities compared to others, Luanda in Angola is the world’s most expensive city for the second year in a row, followed by N’Djamena, Chad. European and Asian cities also continue to dominate as the costliest cities with Hong Kong in third place, followed by Singapore. Zurich jumped three places to rank fifth, followed by Geneva in sixth. Tokyo dropped four spots to rank seventh.

Mercer’s authoritative survey is one of the world’s most comprehensive, and is designed to help multinational companies and governments determine compensation allowances for their expatriate employees. New York is used as the base city, and all cities are compared against it. Currency movements are measured against the US dollar. The survey covers 211 cities across five continents and measures the comparative cost of over 200 items in each location, including housing, transportation, food, clothing, household goods and entertainment.

Other cities appearing in the top 10 of Mercer’s costliest cities for expatriates are Bern, Moscow, and Shanghai. Karachi, ranked 211, is the world’s least expensive city for expatriates. Currency fluctuations and the impact of inflation on goods and services influenced the cost of expatriate programmes, as well as the city rankings.

Rankings in many regions were affected by recent world events, including economic and political upheavals, which resulted in currency fluctuations, cost inflation for goods and services, and volatility in accommodation prices. While Luanda and N’Djamena are relatively inexpensive cities, they are quite costly for expatriates since imported goods come at a premium. In addition, finding secure living accommodations that meet the standards of expatriates can be challenging and quite costly as well. This is generally why some African cities rank high in our survey.



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