Thinking of moving to another city? Thinking of moving to a new job? Or perhaps you company is relocating you?
Have you considered the expenses that you are going to incur on the other side, or the savings you may make or not?
As we progress into 2014 and the cost of living changes in many parts of the world, have you considered what is happening in your expat city?
The latest rankings indicate that Luanda is the most expensive city in the world to move to as an expat. The main reason for this is the lack of good accommodation in certain locations available to expats, this has resulted in high rentals for properties. Currency fluctuations and the impact of inflation on goods and services have affected the global city rankings and therefore impacted expenses of expatriate programs over the past year. Added to this goods that are imported, mainly for foreigners, are done so at high costs. Although, Luanda is one of Africa’s major oil producers, it also has some of the continents highest poverty levels and yet is not only the most expensive city in Africa but also in the world.
Taking all the basket groups into account, Household Accommodation, which includes rentals, is one of the biggest cost of living expenses for employees and comprises 30% of the cost of an expatriate’s expenditure. Therefore it is important to be aware that when researching a move to another city or country, that even though property may be generally cheap for the local population of a country, this may not be of the same quality that most expats expect. In many cases expensive accommodation is found in poorer or low cost countries, because there is usually very little appropriate accommodation available. High demand low availability and high costs result.
Which other cities are on the top ten most expensive list? Zurich and Geneva in Switzerland continue to top the list despite the decrease in accommodation costs and a stable and strong Swiss Franc.
Despite the large falls in the value of the Bolivar, Caracas moves up the rankings from January 2013, this is due to the increase in inflation of between 30 and 40% in 2013, and the severe shortages of imported goods.
Companies who send their employees on assignments to Venezuela, should continuously monitor the situation to ensure that they are adjusting expatriate cost of living allowances appropriately. Because the Bolivar is pegged to the USD, it remains considerably overvalued, however the increasing pressure on the currency could lead to its further devaluation. Prices in Caracas’ basket groups have increased substantially over the past year. Although a devaluation would initially further increase inflation, the shortage of dollars on goods on shop shelves will worsen if this does not occur.
Due primarily to a weaker Yen – hitting a five year low, having lost more than 20% to the US dollar in the past year – Tokyo has slipped down through the rankings throughout 2013 having been in the top three most expensive locations up until April 2013, it is now ranked 12th most expensive in the world. I has remained in the top 20 due to high infrastructural costs such as its high rentals.
Singapore has also remained within the most expensive expatriate locations due to high rental costs, this has also pushed Chad in Ndjamena up the rankings from 185th to become the 28th most expensive expatriate city.
The weakening currencies against the USD in the past year, has contributed to lower cost of living indexes for assignees going to these countries, but higher indexes for those being posted from these countries, currencies that have weakened are: Argentina (34%), Australia (16%), Brazil (16%), Ghana (25%), India (13%), Indonesia (25%), Malawi (30%), Mongolia (20%), Myanmar (14%), Papua New Guinea (21%), South Africa (26%), Turkey (21%).
For all the Year to Year Top City Cost of Living Rankings go here
Regional Highlights for Africa, Americas, Europe, Asia Pacific, Middle East and South Asia go here
While on international assignments ensure that you or your employee’s spending power is not compromised by changes in inflation, the availability of goods as well as exchange rates. Multinational companies will often include a cost of living allowance in their pay packages to ensure that employee’s remuneration packages are not compromised by changes in the relative cost of living.
Steven McManus is the founder of Xpatulator.com that provides cost of living information for locations worldwide, including COL index, hardship index, and mobility calculators used when moving or relocating on an international assignment to a global destination. The four difference calculators use a customizable COL index, hardship index, exchange rate and assignment salary to calculate an equivalent expat salary, depending on your requirements.