America, Europe or Asia: those are the usual continental suspects which come to mind when asked where the world's most expensive cities for expats are located. They are also incorrect.
According to the most recent study conducted by Mercer consultants not only the world's most expensive city, but also the second most expensive place for foreigners to live at this moment, are located in the one continent which we predicted two years ago, would become a Chinese colonial feeding ground. Africa.
According to the FT, "the tight supply of international standard housing in Luanda has put the Angolan capital top of the list of the most expensive cities in the world, according to a survey by consultants Mercer of the costs of living abroad. It held the same position last year as the oil boom continues to suck in expats.The rush for hydrocarbons has similarly pushed N’Djamena, Chad’s largest city, up into second place as some of the cities more commonly associated with the high cost of living have dropped down the rankings."
Moscow has fallen from second to ninth, while Tokyo slips four places to seventh. In the absence of any large inflationary pressures, the biggest single reason for the realignment over the last year – Mercer compared the cost of a basket of items from housing to the a cup of coffee in February this year to the same month in 2013 – is exchange rates.
Most of the movements in the rankings this year have been driven by the movement of the local currency against the US dollar,” explains Kate Fitzpatrick, a consultant at Mercer.
The survey uses New York as its base city to compile the rankings and the relative strength of the US currency has had a big impact on the league table, she says.
Some examples: A cup of coffee in Moscow and Tokyo will still set you back more than $6, compared to just $1.81 inNew York, the 17 per cent jump in the value of the dollar against the Russian ruble and its 10 per cent rise against the yen, rather distorts the picture.
As for just renting, Hong Kong moved up to third in the rankings, from sixth last year, lifted by its high rental prices with a two bedroom international standard apartment costing $6,960 per month. Australia also looks more alluring given the fall of its currency against the greenback. Sydney has tumbled out of the world’s top 10, falling from ninth to 26th place in the rankings, while Melbourne slipped from the 16th spot all the way down to number 33.
It's not all doom and gloom for expats. One can live cheaply in, for example, Pakistan:
The cheapest place for a company to send its staff remains Karachi ranked 211th, because of the very low cost of accommodation. Rent for a two bedroom unfurnished apartment of “international standards” in Pakistan’s largest city costs just $304 per month, compared to $6,600 in Luanda.
Somehow we doubt this "value trap" will have much of an impact on expat's residency plans.