HONG KONG (Reuters) - Volatile exchange rates stemming from the global financial crisis mean London and Seoul are no longer among the top 10 most expensive locations for expatriates, while Japanese cities have returned to upper end of the league table, a survey showed on Thursday.
London is now ranked 72nd in the global listing of expat locations while Seoul takes 90th place following their currencies’ sharp depreciation in the past year.
Angola’s capital Luanda remains the costliest place for foreigners. That is mainly because certain items and brands typically required by expatriates are not readily available and therefore very expensive, according to the survey by London-based ECA International, which advises companies globally on international assignments.
The survey compares a basket of 125 consumer goods and services commonly purchased by expatriates in more than 370 locations worldwide.
Moscow has replaced Oslo as Europe’s most costly location while a strong yen has made Tokyo the second-most expensive city in the world, up from 13th position a year ago.
A 48 percent depreciation in the South Korean won means goods and services in Seoul — which a year ago were 5 percent more expensive than in Tokyo — are now 40 percent cheaper than prices in the Japanese capital, ECA said.
Such sharp currency swings create a challenge for companies remunerating expat packages, most of which are based on an expat’s home currency, says ECA.
“Companies which split pay between the employee’s home and host countries will be much better equipped to ride out the current currency volatility,” said Lee Quane, Asia general manager of ECA International.
The survey does not cover the cost of accommodation, school fees or car purchases, which ECA says are usually compensated for separately in expatriate packages.
Surging costs in China pushed Beijing up to 31st place from 101st a year ago and Shanghai to 35th place from 106th.
Manhattan shot up to 20th place — tying with Paris — from 54th a year ago as a rebounding U.S. dollar made U.S. locations, and locations with currencies tied to the dollar such as Hong Kong, much more expensive.
“In the past two months, goods and services in Hong Kong have swung from being 10 percent cheaper than in London to being almost 10 percent more expensive,” said Quane.
Beijing, however, is now more expensive than Hong Kong for the first time ever, as a result of surging inflation and appreciation of China’s currency. The cost of living in Taipei and Singapore has also increased, helped by rising inflation.
While a handful of African cities featured in the top 20, Africa is also home to the cheapest location for foreigners, Maseru in Lesotho.
The latest survey was conducted in September but November exchange rates were used in the calculations.
Highest/Lowest Cost of Living ranking November 08
(Ranking Sept 07)
1 Luanda (1) 11 Zurich (81)
2 Tokyo (13) 12 Kinshasa (6)
3 Yokohama (18) 13 Basel (15)
4 Nagoya 20 14 Stavanger (4)
5 Kobe 30 15 Libreville (8)
6 Moscow 3 16 Bern (17)
7 Abuja 21 17 Lagos (52)
8 Copenhagen 5 18 Caracas (128)
9 Oslo 2 19 Helsinki (14)
10 Geneva 9 20 Paris (27)/Manhattan
Source: ECA International
Editing by Ben Tan