Hong Kong is the world’s most expensive city to live in for foreign workers for a second consecutive year due to higher prices and a stronger currency.
New York and Geneva came in second and third in the rankings, according to a study conducted in March by ECA International, a market research company that helps companies to calculate cost-of-living allowances for employees on international assignments. The report ranks 207 cities in 120 countries.
London and Tokyo round off the top five most expensive cities for foreign workers. Steep rent rises were part of the reason London and New York were among the top five most expensive cities, with the cost of leasing property in those cities increasing by 20 per cent and 12 per cent, respectively, according to ECA research.
“Although Hong Kong has been impacted by rising global inflation less than other regional and global locations in the past year, it, nonetheless, remains the most expensive location in the world,” said Lee Quane, ECA International’s regional director for Asia.
“It has been the strength of the Hong Kong dollar, which is pegged to the US dollar, in the past year which has enabled it to maintain its position as the most expensive location worldwide as other currencies have weakened.”
A cup of coffee at $5.21, a litre of petrol at $3.04 and a kilogram of tomatoes at $11.51 were only a few of the prices that took Hong Kong to the top of the list, the research showed.
The survey compared a basket of like-for-like consumer goods and services commonly purchased by foreign workers, while accommodation data was also factored in.
Fuel is one of the major contributing factors to the rising cost of living across the world as demand for oil has surged ahead of supply.
Russia’s military offensive in Ukraine has stoked the global commodities cycle, adding to economic uncertainty, denting global growth and exacerbating inflationary pressures.
Sanctions against Russia, the world’s second-largest energy exporter, are also affecting global energy supplies. Oil prices, which rose 67 per cent in 2021, rallied to a notch under $140 a barrel in March before giving up some gains. They are still up more than 70 per cent since last year.
Food prices remain close to a record high, driven up by the war in Ukraine, and are expected to increase about 14 per cent this year, on top of the 28 per cent gain in 2021.
Russia and Ukraine collectively account for about a quarter of global wheat supply. Before the war, Russia was the world’s largest wheat exporter and Ukraine the fifth, according to World Bank data.
Inflation rose to 9.2 per cent in Organisation for Economic Co-operation and Development countries in April, and was at 40-highs in the US and the UK, driven by a rise in the cost of services and food.
Abu Dhabi climbed six places to rank 22nd in ECA's cost-of-living index, followed by Dubai, which rose eight places to rank 23rd. Meanwhile, Riyadh also rose eight places to be ranked 28th on the index, followed by Doha, which ranked 35th, after climbing 14 places.
“Overall, cities in the region have risen in the rankings in the last year. With inflation up globally, including in the UAE and elsewhere in the region, it is the strong currencies that have pushed these cities in the region up in the rankings compared with other cities,” ECA said.
Amman was ranked 63rd, up two places compared with 2021, and just below Houston (61st) and Moscow (62nd) in the index. Inflation in Jordan has been lower than in much of the region, but the strength of the dinar pushed Amman up a couple of places in the rankings, according to the research.
Meanwhile, Beirut was ranked 153rd in the cost-of-living index, down 131 places. Despite massive price rises in Beirut, the city plunged in the rankings as the Lebanese pound was devalued. This has made the country cheaper for those paid in other currencies as, even after the price rises, they can now buy more in Beirut for their money than before the devaluation, the survey found.
Many Chinese cities have continued to rise up the cost-of-living rankings, with Shanghai now the third-most expensive city in Asia after Hong Kong and Tokyo.
“The main reason for their rise in the rankings has been the continued strength of the Chinese yuan against other major currencies, due to China’s relatively strong economic performance during the survey period, which makes these cities more expensive relative to other locations,” Mr Quane said.
Meanwhile, Japanese cities all slipped in the rankings as the yen weakened due to unexpectedly higher inflation, alongside negative interest rates, the report revealed.
The yen has hit a 20-year low against the US dollar and is at a seven-year low against the euro.
“The weaker yen makes goods relatively cheaper for visitors and expatriate workers paid in other currencies as their money will now go further,” Mr Quane said.
Singapore stayed in 13th place despite significant increases in rent, petrol prices and utility costs. Those were offset by the Singapore dollar, which weakened against other regional currencies during the latter part of the survey period, ECA said.
Other countries in South-East Asia also dropped in the rankings. While Laos and Myanmar experienced high rates of inflation — of about 10 per cent — in the past 12 months, they still fell in the cost-of-living index as their currencies weakened considerably, the company said.
In Thailand, the slow pace of tourism recovery hit the Thai baht during the survey period, further pushing down its ranking, ECA said.
Most locations within the EU fell down the rankings after an unsteady period for the euro, with Paris falling out of the global top 30 and cities such as Madrid, Brussels and Rome slipping, too, according to the research.
“Nearly every major eurozone city saw a drop in the rankings this year as the euro performed worse in the last 12 months than the US dollar and British pound,” Mr Quane said.
Turkey’s Ankara is the cheapest city in the world for foreign workers, after falling five spots to 207th place, ECA research found.
The location that recorded the fastest rate of price growth in the past year was Colombo in Sri Lanka, climbing 23 places up the ECA’s rankings into 149th position globally.
Top 20 most expensive places for foreign workers in 2022
- Hong Kong
- New York
- Geneva
- London
- Tokyo
- Tel Aviv
- Zurich
- Shanghai
- Guangzhou
- Seoul
- San Francisco
- Shenzhen
- Singapore
- Beijing
- Jerusalem
- Bern
- Yokohama
- Copenhagen
- Oslo
- Taipei
