New Zealand cities remain competitive for expats

New Zealand cities remain competitive for expats despite rising cost of living – Mercer Worldwide Cost of Living Survey 2011

• Significant currency fluctuations cause major reshuffle in the global rankings
• Despite rising cost of living New Zealand cities are among the most affordable and appealing in Asia Pacific
12 July 2011

New Zealand cities remain among the most affordable and attractive destinations in Asia Pacific for expatriates despite a rise in the rankings in Mercer’s 2011 Worldwide Cost of Living Survey.

New Zealand has experienced a significant jump in the rankings seeing Auckland move from rank 149 to 118 and Wellington rising 27 places to 136.

Rising costs, due to currency fluctuations and natural disasters have presented challenges for multi-national organisations managing workforces in New Zealand. However, this doesn’t diminish the appeal of New Zealand in the eyes of expatriates or their employers, according to Sarah Barnaby, Senior Associate in Mercer’s information product solutions business in New Zealand.

“Despite a rise in the cost of living, New Zealand remains a highly competitive location for international employers with rankings far below those of other cities in Asia Pacific. Additionally, multi-national organisations are more than likely to absorb any short-term increases associated with relocating staff to New Zealand,” Ms Barnaby said.

“Organisations managing an international workforce should not view costs associated with currency fluctuations in isolation but factor it into the longer-term growth plan for the business,” she said.

Mercer’s annual Cost of Living survey covers 214 cities across five continents and measures the comparative cost of over 200 items in each location, including housing, transport, food, clothing, household goods and entertainment. It is the world’s most comprehensive cost of living survey 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 New York.

Tokyo, Osaka, Singapore and Hong Kong remain the most expensive destinations in the Asia Pacific region with Singapore at 8th place and Hong Kong at 9th place.

Globally, Luanda in Angola is the world’s most expensive city for expatriates for the second year running. Tokyo remains in second position and N’Djamena in Chad in third place. Moscow follows in fourth position with Geneva in fifth and Osaka in sixth. Zurich jumps one position to rank seventh, while Hong Kong drops down to ninth.

Across the Tasman, Sydney (14) is up ten places, Melbourne has moved from rank 33 to 21 and Perth has surged 30 places to reach rank 30. Canberra (34) has moved up 40 places and Adelaide (46) is the country’s highest riser, moving 44 places.

Global Overview

Luanda in Angola is the world’s most expensive city for expatriates for the second year running, according to Mercer’s 2011 Cost of Living Survey. Tokyo remains in second position and N’Djamena in Chad in third place. Moscow follows in fourth position with Geneva in fifth and Osaka in sixth. Zurich jumps one position to rank seventh, while Hong Kong drops down to ninth.

New entries in the top 10 list of the costliest cities in the world are Singapore (8), up from 11, and São Paolo (10), which has jumped 11 places since the 2010 ranking. Karachi (214) is ranked as the world’s least expensive city, and the survey found that Luanda, in top place, is more than three times as costly as Karachi. Recent world events, including natural disasters and political upheavals, have impacted the rankings for many regions through currency fluctuations, cost inflation for goods and services, and volatility in accommodation prices.

Down one place from last year, London (18) is the UK’s most expensive city, followed by Aberdeen (144), Glasgow (148) and Birmingham (150). Belfast (178) is ranked as the UK’s least expensive city.

The survey covers 214 cities across five continents and measures the comparative cost of over 200 items in each location, including housing, transport, food, clothing, household goods and entertainment. It is the world’s most comprehensive cost of living survey 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 New York. Currency movements are measured against the US dollar. The cost of housing – often the biggest expense for expatriates – plays an important part in determining where cities are ranked.

Nathalie Constantin-Métral, Senior Researcher at Mercer responsible for compiling the ranking each year, commented: “Multinational companies have long understood the competitive advantage of a globally mobile workforce, though the enduring challenge is to balance the cost of their expatriate programmes. Currency fluctuations, inflation, political instability and natural disasters are all factors that influence the cost of living for expatriates. It is essential that employers understand their impact, for cost-containment purposes but also to ensure they retain talented employees by offering competitive compensation packages.

“During the period of data-collection for this year’s survey the world witnessed an incredible number of natural disasters and political upheavals that have all affected the lives of expatriate employees to some extent. Currency fluctuations and the impact of inflation on goods and services – petrol in particular – have led to some reorganisation of the ranking,” said Ms Constantin-Métral. “Overall, the cost of living in cities across Europe has remained relatively stable, while in Africa the picture is patchy with the limited availability of accommodation leading to increased living costs in some key cities.

“In North America increasing petrol prices continue to contribute to rising consumer prices, but many of its cities dropped in the rankings, as price increases in other regions have been more severe pushing US cities down the list. Australian cities have witnessed dramatic rises in the ranking as the Australian dollar has strengthened against the US dollar.”

Asia Pacific
The most expensive city in Asia is Tokyo (2), followed by Osaka (6). Singapore (8) has joined the list of the world’s top 10 most expensive cities and is followed by Hong Kong (9). Nagoya (11) in Japan is up eight places whereas Seoul (19) is down five. Other highly ranked Asian cities are Beijing (20), Shanghai (21), Guangzhou (38), Shenzhen (43) and Taipei (52). Ms Constantin-Métral commented: “Most Asian cities have moved up in the ranking as availability for expatriate accommodation prices is limited and demand is high.”

New Delhi (85) is India’s most expensive city followed by Mumbai (95) and Bangalore (180). Elsewhere in Asia, Jakarta ranks 69, Hanoi 136, Bangkok 88 and Kuala Lumpur 104. Karachi (214) is the region’s least expensive city.

Europe, the Middle East and Africa
Only three European cities remain in the top 10 list of most expensive cities. Moscow (4) is still the most costly European city on the list, followed by Geneva (5) and Zurich (7). Oslo (15) is down four places from last year, whereas Bern (16) has jumped six and Copenhagen dropped seven places from 10 to 17. London (18) is followed by Milan (25) and Paris (27) – both down 10 places from last year. St. Petersburg ranks 29, followed by Rome (34) and Vienna (36). Up from 76 in 2010, Stockholm (39) has seen one of the most dramatic changes in the region – mainly due to a considerable strengthening of the local currency against the US dollar.

Ms Constantin-Métral commented: “In most Western European cities, the cost of living for expatriates has remained relatively stable over the last 12 months. However, many of the region’s cities have still dropped in the ranking. In large, this is because all cities are compared to New York and price increases there have been more significant than in most European cities. Some reduction in accommodation costs, due to the economic downturn, has also been behind changes in rankings for select European cities – most notably Athens and Barcelona.”

Ranking 24, Tel Aviv is down five places from 2010 but continues to be the most expensive city in the Middle East. Abu Dhabi (67), Dubai (81) and Amman (103) follow having dropped 17, 26 and 20 places in the ranking respectively. “The trend of falling accommodation costs continues across the Middle East region, driving the cities down the ranking along with the cost of living for expats. Dubai in particular is witnessing a drastic reduction in accommodation costs as the supply of property keeps flooding the rental market,” said Ms Constantin-Métral.

Luanda (1) remains the most expensive city for expatriates across Africa and globally, and N’Djamena follows in third place. Libreville (12) has slipped five places since last year. Niamey remains at 23 whereas Victoria (25) in the Seychelles dropped 12 places as the Seychelles rupee has weakened against the US dollar. In South Africa, Johannesburg (131) and Cape Town (158) have leapt 20 and 13 places in the ranking respectively, reflecting the strengthening of the South African rand. The least expensive cities in the region are Tunis (207) and Addis Ababa (211).

Ms Constantin-Métral commented: “Finding good and secure accommodation for expatriate employees is a real challenge in most of the African cities on the list and costs can be significant compared to other regions. Accommodation prices are currently at record levels in cities like Luanda and this is generally the main reason why we find so many African cities high up in the ranking.”

The Americas
Up 11 and 17 places in the ranking respectively, São Paolo (10) and Rio de Janeiro (12) are now the most expensive locations for expatriates in both North and South America. In South America, Brasilia (33) is the third most expensive city, up 37 places since last year’s ranking. High inflation on goods and services means Caracas in Venezuela has also shot up in the rankings, to rank 51 from 100 in 2010. Bolivia’s La Paz (212) and Nicaragua’s Managua (213) were the least expensive cities in South America.

“Inflation pressures continue to be the main impact on the cost of goods and services in Argentina and Venezuela, causing their cities to jump in the ranking. Overall, exchange rates in South America remain relatively stable, with the exception of local currencies in Brazil, Chile and Costa Rica which have all strengthened significantly against the US dollar, causing the region’s cities to rise in the ranking.” according to Ms Constantin-Métral.

At rank 32, New York is the most expensive city in the United States. Los Angeles (77) and Chicago (108) have dropped significantly in the rankings (22 and 17 places respectively) as price increases on goods and services have been moderate compared to New York. Washington, however, also at ranking 108, has climbed three places, as rental accommodation prices have increased significantly. Ms Constantin-Métral said: “Generally speaking rental prices increased slightly in most US cities as the economy is recovering and demand for housing is catching up.”

Portland (186) and Winston-Salem (197) are the least expensive cities in the United States. Up 17 places, Toronto (59) has overtaken Vancouver (65) to become the most expensive Canadian city in the ranking, followed by Montreal (79) and Calgary (96). Ranking 114, Ottawa is the least expensive city in Canada.

Mercer produces individual cost of living and rental accommodation cost reports for each city surveyed. For further information, or to purchase copies of the individual city reports, visit www.mercer.com/costofliving or call Client Services, Warsaw on +48 22 434 5383.

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