Scandinavia’s making a killing, according to the biannual report from ECA International: Stavanger in Norway is also in the top five most expensive cities to live in.
Tokyo has been ranked the most expensive location for international assignees for the past three years, but has fallen five places to sixth in 2013’s ranking. Oslo is followed by the Angolan capital of Luanda, where the goods and services commonly purchased by expatriates are difficult to access and command a premium. Stavanger (Norway), Juba (South Sudan) and Moscow (Russia) are also now more expensive than Tokyo.
“Tokyo has always been an expensive place for global companies to send staff, and, despite its five-place fall since last year, that remains the case,” said Anna Michielsen, ECA’s General Manager, Australia, New Zealand & Pacific.
“The significant depreciation of the Yen against other major currencies in recent months is the primary reason for this drop. It means that for many companies, the cost of maintaining their assignees’ purchasing power while posted there has fallen. But it’s important not to exaggerate the position – Tokyo is still the world’s sixth most expensive city, and the most expensive in Asia.”
Sydney remains the most expensive Australian location surveyed. It is the 17th most costly location for expatriate globally followed by Canberra (23rd), Perth (27th), Melbourne (28th), Adelaide (30th), Darwin (34th) and Brisbane (35th).
For the first time in recent years, though, all these cities have seen falls down the global ranking.
The slowdown in Australia’s economy has seen its currency weaken as well against some of the other major currencies, adds Michielsen. “In addition, the rate at which prices of items in our cost of living basket for Australia has increased is slower than it was a year ago. Together these factors mean that for many multinational companies the cost of sending assignees here will have gone down.”
Why is Oslo top of the list, then? It comes back to currency again.
The Eurozone debt crisis still affects much of Europe and cost of living in many locations across the region fell as a result of the weak euro and low inflation compared with other regions.
The Norwegian Krone, though, has stayed strong, just like its resilient economy. It is no coincidence that Scandinavian investors have stepped up their activity in other country’s property markets in the past 12 months, increasingly accounting for sales in bargain basement Spain, investment hotspot USA and other popular real estate destinations.
Oslo also benefits from Norway’s reputation for quality: the country boasts one of the highest standards of living in the world, rivalling that of Canada and Australia.
Within Europe, the Russian Rouble has weakened between surveys against major currencies but the cost of goods and services in ECA’s basket in Moscow has nevertheless increased more than 10% again this year.
Despite falls in prices and the Swiss Franc weakening against other major currencies over the past year, Swiss locations remain among the top ten most expensive locations for expatriates in the world.
British locations are among those in the region to have fallen most in the ranking. Central London dropped 21 places and is currently in 87th place globally, largely as a result of the pound depreciating against other major currencies – a drop that could well encourage further investment in London’s real estate, as foreign investors look for safe havens to put their cash and, for many non-EU buyers, eventually house their children during overseas studies.
Within Asia, Japanese cities still dominate the top of the cost of living ranking – 4 of the region’s top 5 most expensive locations are found there. Seoul joins them, having jumped from 7th to 3rd most expensive Asian location (and from 29th to 14th globally). Not only have the prices of goods and services there increased at a faster rate than the previous year, but the Won has also strengthened against major currencies thereby pushing up costs there for many international assignees.
Beijing (24th globally), Shanghai (26th), Singapore (36th) and Hong Kong (38th) complete the list of the top 10 most expensive locations in Asia. On average, prices of items in ECA’s cost of living basket for Chinese locations have increased little or even seen small decreases this year. As a result, Chinese locations have fallen slightly down the ranking but the on-going strength of the Yuan against major currencies has prevented them from dropping too far.
Despite dropping down the ranking, Caracas, ranked 33rd globally, remains the most expensive location in the Americas for international assignees. Manhattan and Vancouver follow, ranking 43rd and 51st respectively.
The weakening of the Brazilian real against many major currencies over the year has more than offset the 6% price increase overall of items in ECA’s cost of living basket for Brazil and locations there continue to drop down the global ranking. While Rio de Janeiro is the 4th most expensive location in the Americas, it has dropped 20 places globally to 52nd spot.
The economic situation in Argentina remains complicated. Despite showing signs of slowing, inflation there is still above 20% while the black-market peso exchange rate in Argentina has soared. Buenos Aires has risen from 76th to 64th position in the global cost of living ranking. Two years ago it ranked 130.
Tel Aviv ranked 37th globally remains the most expensive location for assignees in the Middle East. Dubai has gained 8 places and is positioned 174th worldwide.
Four of the world’s 20 most expensive expatriate locations are in Africa: Luanda (2nd globally), Juba (4th), Brazzaville (18th) and Kinshasa (19th). South African locations Durban (253rd globally) and Cape Town (251st) are among some of the cheapest locations in the world while locations in Malawi are those to have seen the continent’s biggest falls down the ranking. Cost of living there has fallen significantly following the devaluation of the kwacha after the government was recommended by the IMF to float the currency.
One thing remains certain, though: Oslo is on top of the world’s cost tables. And Scandinavia is making a killing.
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