July 15th, 2011
02:01 AM GMT
Share this on:

Hong Kong (CNN) – The most expensive city in the world for expats is … in Africa? Ok I’ll admit I was surprised when I read this finding from Mercer’s 2011 Cost of Living Survey.  The place: Luanda, the capital city of Angola. But when you look at the consulting company’s formula, it makes sense.

Mercer looked at two main variables.  One is the strength or weakness of the local currency compared to the same time last year.  If it’s grown stronger against the U.S. dollar then that would push the city higher in the rankings.  The other is the price increase or decrease of a basket of commodities. If the price increased relative to the basket of goods based in New York, then that would push the city higher as well.

Here’s Mercer’s top 10 list this year. Is your city here?

1. Luanda, Angola
2. Tokyo, Japan
3. N'Djamena, Chad
4. Moscow, Russia
5. Geneva, Switzerland
6. Osaka, Japan
7. Zurich, Switzerland
8. Singapore, Singapore
9. Hong Kong, China
10. Sao Paolo, Brazil

Well, with Luanda three major factors help write this story: expensive oil, expensive foreign housing and expensive imported commodities. Let’s start with oil first. Angola is an OPEC member country and one of Africa’s biggest oil producers.  And it’s using its oil profits to fuel a reconstruction boom after a civil war that ravaged the country for nearly three decades.  That recovery is pulling in foreign workers, many from China, Brazil and Portugal.  Those workers need homes to stay in – and likely homes that meet developed country standards.  That drives up housing costs.  Plus those expatriate workers would likely want food that needs to be imported.

Now those workers may not want a McDonald’s hamburger, but for sake of convenience and ubiquity let’s say they do.  A quick Google of “McDonald’s,”  “hamburger” and “Angola” will find that you can buy the iconic American sandwich in a place called Angola.  But, on closer inspection, that’s the city of Angola – in the U.S. state of Indiana.  As for Angola the country? Sorry, no officially-sponsored Golden Arches will be found. The closest one is more than 3,000 kilometers away in South Africa.

Hence, food imports, oil and foreign housing are behind Luanda’s claim to costliest fame.

Rounding out the top five, similar factors come into play.

It’s the second year in a row that Tokyo, Japan claims the number two spot.  Ask any expat and they’ll likely tell you housing is at a premium and your rent will get you a space the size of a walk-in closet. Remember this is the land where the capsule hotel was born. Also the yen has been surging in strength as investors flock to the currency as a safe haven.  Over the last 12 months, it's gained 9.97% in strength against the U.S. dollar. An expat who moves to Japan would find his national currency buys less there now that it did before. Bottom line: that makes him poorer. For number three on the Mercer list, we head back down to Africa and N’Djamena, the capital city of Chad.  Moscow and Geneva come in at number four and five. Again it’s either a case of expensive housing for expats or a strong local currency – or both.

It’s also worth mentioning big movement from down under. Australia’s six major cities – Sydney, Melbourne, Perth, Brisbane , Canberra and Adelaide – vaulted between 10 and 44 notches higher from last year.

That’s because the Aussie dollar has gained hardcore against the U.S. dollar.  Over the past year it’s seen a nearly 30% rise. And just since last November, when the Aussie dollar and the greenback were at parity, it’s gained more than 7%. All this diminishes the purchasing power of expatriates in the country, particularly if they’re not paid in Australian dollars.

And a few other interesting tidbits from this year’s survey:

- As for the top 20 most expensive cities, that list was clearly dominated by Asia-Pacific metropolises. After Tokyo (2), Osaka (6), Singapore (8), Hong Kong (9), Nagoya (11), Sydney (14), Seoul (19) and Beijing (20) were listed.

- Interestingly, New York only came in at number 32 after having dropped in rank from number 27 in 2010.

- And if you’re looking for the cheapest city to live in? This Mercer survey says you’d have to relocate to Karachi, Pakistan.  At number 214 of 214, prices there are one-third cheaper than in Luanda.

After talking about the survey on World Business Today, my mom text messaged me saying “Don’t think will move to Karachi just yet”. On that note, I’ll check to see if Mercer took desirability or safety into consideration.

Do you think your city’s ranking was a fair or unfair assessment?  Where do you see your city headed in the rankings for next year? More expensive or cheaper – and why? Do you think you should get paid more for where you live?



soundoff (34 Responses)
  1. TheGadfly

    "And it’s using its oil profits to fuel a post-civil war reconstruction boom that ravaged the country for nearly three decades."

    That must be a terrible reconstruction, if it's ravaged the country for three decades.

    July 15, 2011 at 3:07 am |
  2. BondiGirl

    This analysis is a bit flawed. I'm a US expat living in Sydney, and it is outrageously expensive, even for Aussies. The flaw comes in looking at the price CHANGE in order to push the city higher or lower on the list. In Sydney, food is so expensive that it's not going to RISE much year over year. That doesn't mean it's inexpensive. I've traveled all over the world, and I can tell you Hong Kong & Sydney are the 2 most expensive places to live, whether you're getting paid in US$ or not.

    July 15, 2011 at 4:08 am |
  3. David

    Port Moresby as an honorable mention. U.S $2000.00 to as much as $5000.00 a week for a good apartment thanks to a lack of accomodation and a resources boom in Papua New Guinea. And the 'Big Mac' test doesnt work as there is no McDonalds in Papua New Guinea.

    July 15, 2011 at 6:18 am |
  4. Kyle H. Davis

    This list is not representative in any way...

    Here is what I perceive to be some MAJOR flaws in the presentation of this data:

    First – Per-Capita GDP or national CPI is not mentioned. If you are not going to take local salaries/cost of living into account when calculating this, how in the world are you going to truly represent what is "Expensive" or not?

    It seems that the article is basing things on the skewed idea that expats are all from major developed nations, going to less developed nations. I mean, seriously... do they really want us to think living in Angola is more expensive because the nearest McDonald's or "western housing" is 3,000 miles away? That's a tad narrow minded.

    Secondly: And as BondiGirl pointed out, calculating based on a years change in value does not give a true representation if you are not taking into account what the conditions were before that change, compared to other nations.

    How can you use that as such a major factor when dealing with nations that control the value of their currency? Think about it – the Chinese Yuan has only appreciated $0.30 over the past 30 years... If Beijing is ranked at #20, and it isn't there because of currency change, it must mean that the cost of items must be quite high to have offset that particular part of the calculation.

    July 15, 2011 at 7:35 am |
  5. baldwin2113

    Geneva: I lived in a 56 year-old one-bedroom apartment that had never been renovated and paid $1,560 a month! The walls were sticky and moldy, pocket sized kitchen and bathroom, some gooey gunk would spurt out of my sink every other day, ... - and still had to compete with 30+ people and write a one page letter to the rental place explaining why I was the best candidate to get the apartment! Being able to afford decent housing in that city is a major problem for expats and locals alike. Yet the local government does not take any noticeable action to improve this situation and is unable to adapt to population growth. It certainly isn't cool for a city to rank in the top 10 of this list.

    July 15, 2011 at 7:38 am |
  6. Kyle H. Davis

    Another thing I can't quite figure out... how are they calculating this for US cities? Are they basing it against the fall of the US dollar and how much it would cost to eat at an "angolan" restaurant?

    July 15, 2011 at 7:39 am |
  7. Carl

    Do they have McDonalds in Karachi?

    July 15, 2011 at 8:27 am |
  8. Bortop

    Well, now I know where to be careful of on my next move. Felt like leaving the US for a while, so I moved to Bangkok after visiting a friend here and found myself liking it here. A lot. For now. One day the US economy might come back and I might be able to get a job somewhere other than a gas station.

    Anyway... here goes. I don't make much (in US $) here. I make 42,000 Baht per month, which comes out roughly to $1400. However... My rent AND bills last month came out to a whopping $140.20. Yep. My rent and bills take up almost exactly 1/10 my monthly salary. Granted, I'm one of those thousands of so called "English Teachers" who flock here every year, but I earn it.

    So that leaves the rest in disposable income. And that's a hell of a lot of leftover money even for the US, imagine what it's like in a place where lunch costs a dollar. And I still have all the luxuries of home. And this is the easiest move I've ever made. Easier than just moving to a different apartment in the same American city.

    So for you unemployed, single, non-homeowner Americans who feel betrayed by their own country.... sell your car and come here for a while and wait it out. At least you'll have something to do and some money. Those unemployment checkes aren't going to last forever....

    July 15, 2011 at 8:34 am |
  9. Stekatz

    Not to mention, that in places like Luanda and N’Djamena, there's a lot of hidden costs that push up the price of the imported goods that most expats demand. Sure, in Angola an apple from South Africa is going to cost more than apple grown outside of Luanda, but many countries import a large portion of their food stuffs. The reason it's so expensive in Angola is because there's a large culture of corruption that dominates normal business. So to import the apple you have to give the customs guy a cut, the transport people a cut, the police at the road block a cut and so on. By the time the apple gets to supermarket shelves, it's cost the importer the equivalent of an apple tree – a price which is conveniently passed onto the consumer. For more information about expat life readers should check out http://www.expatarrivals.com.

    July 15, 2011 at 8:49 am |
  10. alex

    i'm just back from osaka. you can easily stay cheap there. maybe the author is talking about high end restaurants and first class hotels.

    July 15, 2011 at 9:08 am |
  11. Eric Burgess

    I am Angola born in Luanda, letf Angola 21 years ago and went back last year and this years in 21 years, i have to say that i was shocked with prices! the statiscs aren't liying, i live in the UK for quite sometime i can or would find a hostel for £180 per week here in the UK, which's what i was going to pay per day in a hostel with lower standards in Luanda, do u want to know about 2-4 star hotel prices in Luanda? i don't think so, there are in fact some visible project up and runing in Luanda, i also think that the world is very critical about angola to develop itsef but it's making good progress dispite being a bit slow, but i would say that the most developed countries or the like of UK, Germany, France, and others took far longer get where they are after the first and second world war, so give angola some time and credit to adjust itself after 30 year civil war beside the colonialasation from portugal.

    July 15, 2011 at 9:24 am |
  12. Bortop

    @ David RE: Port Moresby. I had considered there as part of my early mid-life crisis/adventure. But I've read about how violent that city is... do you live there? Besides the cost of living, how is it for a Western Expat (American to be specific)? In a year and a half or so, I might be sick of Thailand, but still not ready to go home. I need ideas (already starting to look).

    July 15, 2011 at 9:32 am |
  13. AmericanAbroad

    Several main assumptions as pointed out are flawed. And this article focuses on Luanda saying that Brazilians, Portuguese and Chinese being brought in, yet talks about comparisons to the US dollar and eating at McDonalds. The research seems to ignore all expats who work on local currency. I'm a senior level executive from the US who was lived in 4 countries and has NEVER been paid in US dollars. There are many of us from many countries out here. Don't we count?

    As others have pointed out, the research should focus on local costs relative to pay – measuring for both expats on local currency and expats on home currency. Some expats have additional expenses for security (eg. in Lagos) that double the cost of living. We pay dearly for cars, international schools, flights back to the home country, varying costs of health insurance, pension funds, etc. I know from experience that Amsterdam is more expensive for housing and owning a car than Zurich or Geneva.

    I'm disappointed that Mercer did such a surface treatment of this topic – the data is really quite useless for serious application. One more thing...we expats rarely eat at McDonald's!!!

    July 15, 2011 at 11:53 am |
  14. Steve Thompson

    Demographia researches house prices in seven nations around the world and measures the affordability of a median home in terms of median household income as shown here:

    http://viableopposition.blogspot.com/2011/02/demographia-international-housing.html

    Hong Kong, Sydney, Australia and Vancouver, Canada are the top three least affordable cities if you wish to purchase a home.

    July 15, 2011 at 12:18 pm |
  15. shirokuma

    Yes,

    Tokyo at number 2. As always.
    Alex states correctly that there are cheap places to stay in Osaka. Cheap places in Tokyo as well.

    The biggest problem is that this set of criteria is for an expat on the expat plan,
    Tokyo is considered a tough place to live
    The language is difficult
    The apartments are too small (an average family of 4 lives in something about 40 – 60 square meters, or about 420 – 650 square feet)
    There are few international schools.

    Thus the average expat get a good allowance for housing, schooling and "hardship". That is all to offset the allegedly high cost of living, that and most spouses can't work due to visa restrictions.

    Can American expats live outside the American culture bubble? Can the do without Mac, Starbucks and 2500 square feet of living space?

    Yes, ask anyone of the other Americans living in Tokyo. They adapt.

    July 15, 2011 at 12:48 pm |
  16. Mani

    @ Carl, Yes! McDonalds, KFC, Hardees, Pizza Hut you name it bro. Plus the delicious local cuisine. If you can get used to the spice that is!

    July 15, 2011 at 4:20 pm |
  17. James

    ha ha ha ha ha baldwin2113 thinks that $1500 for a 1 bedroom apartment is a lot! geneva may indeed be expensive, but that anecdote isn't going to cut it!

    moscow's 'expensiveness' is overrated. yes, if you're going to try to compete with the classless oligarchs, then sure. however, otherwise it's simply not that bad. expensivewise, i mean. it's a horrible city full of some of the worst human beings on the planet, but, from a money standpoint, it's actually ok.

    tokyo is expensive if you personally rent a $20,000 per month apartmnet in aoyama. but who does that? while tokyo is not cheap, there are plenty of reasonable options for people. that is true in spades in osaka.

    to wit, london is not on the list. why? it's because while central london is arguably more expensive than any of these places, you english speaking readers know that you dont have to live in the most expensive parts. heck, my investment banker friends dont live in the most expensive parts. so, this list largely plays upon the english speakers' ignorance of alternatives.

    July 15, 2011 at 5:09 pm |
  18. Kyle H. Davis

    @James: Not to mention the fact that Switzerland is in the top 10 nations ranked by Per-Capita GDP. (Generally right below that of the US). :)

    I'm still really amazed at the narrow minded/lazy attitude that people seem to have when using "imported goods" or "western housing" as part of the calculation.

    I guess this is one of the reasons I don't hang around with other foreigners in China. As long as someone is going to live a different lifestyle than the lifestyle of the nation they are living in, of course it might be more expensive.

    I just have images of white guys in sub-Saharan Africa, munching on McDonald's hamburgers, driving a Ford Explorer, and living in some "foreigners only"-styled western housing... while the natives are in shacks, and washing their clothes in streams. I guess the title should be more like "World's most expensive city for culturally ignorant, egotistical expats is where?"

    July 16, 2011 at 4:21 am |
  19. cri

    Just because some sub literate moron wants to live in a delapidated shack and roll around in the mud doesnt mean i should have to. Thats why we want our explorers and big macs... because we know that living the native way sux!!

    July 16, 2011 at 5:33 am |
  20. Yaroslava Naumenko

    For example, did you know that apartments in the provincial Asian city of Almaty 2 years ago cost as much as apartments in a quite good area of New York or London?
    The rapid growth in property prices in Kazakhstan was provoked by expensive oil with which Kazakhstan is rich in. Four years ago Kazakhstan banks in euphoria began to take credits around the world to give local people mortgage at 25% per annum.
    The average salary barely reached $200, but due to the massive mortgage apartments prices rose to $150,000-250,000. Prices from a half-million to several million dollars began to appear.

    July 16, 2011 at 2:46 pm |
  21. David

    Bortop: Ive been in PNG for 22 years. Accomodation is typically paid for by the employer but given the costs you can expect to be sharing unless you are a 'high value 'asset. Crime is down from the early nineties but its still an issue... when I travel to work I go in a company vehicle with an armed escort during hours of darkness, and last week the escort was hijacked and their guns stolen. Outside the main cities PNG is a delight and Id recommend working in smaller centres. If you can include accomodation in your package the other costs are actually good by western standards... its the rents that really hurt.

    July 16, 2011 at 10:56 pm |
  22. Bulay

    I am not sure why Djibout was not included in the list. It's more expensive than all these cities. Cup of coffee is $5.7 USD, and OK dinner forget it....Whaping $50 USD. One small bedroom is $900, and electricity for the summer months are $600 per month minimum. CNN, Next time include Djibouti in your to do list.

    July 17, 2011 at 2:34 pm |
  23. Kyle H. Davis

    @cri – Did I touch a nerve there? It must have hit quite a personal note for you to have attempted such a personal response.

    I just thought it was quite sad for a business analyst to actually include the fact that he googled the location of a McDonald's in Africa as part of an analysis of cost of living for expats.

    Nobody is asking others to roll around in the mud and live in huts... What's next, calculating in how much it will cost to send your mother over to wash your clothes?

    July 17, 2011 at 4:42 pm |
  24. JoeyJoJo

    Perth, Australia is easily the most expensive city I've ever been too. The prices seemed more expensive than Singapore or Oslo and in general many thngs would cost double to Sydney.

    July 17, 2011 at 4:58 pm |
  25. erik

    I find it bizarre that they judge a city expensive for expats because the local currency is strong against the dollar. That will make it expensive if you're getting paid in dollars, and I do know expats who are paid in dollars instead of local currency, but IME they are the exception rather than the rule. I get paid in euros, and for me the weak dollar is fantastic - I make every transaction I possibly can in dollars.

    July 17, 2011 at 10:17 pm |
  26. Kyle H. Davis

    @cri Wow. I must have hit some sort of personal nerve there, for you to have given such a personal response.

    My point was that I thought it was quite ridiculous for a "CNN Business Analyst" to be writing a report in which he uses an example of Googling the nearest McDonald's in Africa as a determining factor for how expensive a place is to live.

    What's next... checking airline prices to have his mother come and wash his clothes?

    Nobody expects people to live in grass huts and roll around in the dirt. Expats are not living in nations because of "colonialism". I don't see any reason a person would be living the expat life in a nation where the populace is rolling around in the dirt, if it was not a personal decision...

    July 17, 2011 at 11:45 pm |
  27. Samuraishonan(dot)blogspot(dot)com

    I have been in Japan for 28 years. Work in Tokyo, and live in Kanagawa-ken South of Tokyo. I love the place and although housing can be small, it is efficient and a pleasure not to have to decorate useless rooms no one uses anyway.
    Food is very inexpensive as long as you do not eat like a corpulent, obese typical American. You learn to adapt and you you become healthier. The choice of fish will make your jaw drop. Meat is excellent. Beef and pork and chicken superb. Vegetables outstanding too. Fruit very sweet, but a bit expensive. Play seasonal. If you have a large family there is always Costco, but there is a new food chain making moves called EVA. It is very good!
    You can always contact me through my blog if you want more information. I will gladly help you out. Blog address is my name.

    July 18, 2011 at 12:13 am |
  28. faju

    Carl
    Do they have McDonalds in Karachi?

    Yes more than 25 locations, not only McDonalds, but also u can easily find Subway, KFC, Pizza Hut, Dominos, Papa Jones, Dunkin Dounts, Arizona Grill etc....South Asia's largest food street is in Karachi..and also karachi is the 3rd largest city of the world after Shanghai and Mumbai...So please don't underestimate it...thank you...

    July 18, 2011 at 9:52 am |
  29. Sana Ali Aamir

    As a resident of Karachi, i dont think it is cheap at all. Energy costs are higher than the world's average as are security costs, esp for an expat. I wonder id mercer included this in its survey.

    July 18, 2011 at 12:58 pm |
  30. LiveLikeANative

    @cri – So why are you living where you are?! You dont like the way locals live, get the heck out of there instead of moaning unless you are really working and living in a sxhthole!

    August 5, 2011 at 2:02 pm |
  31. LiveLikeANative

    ISTANBUL – It MUST be FREE to live in Istanbul as it is not even listed in the top 200!!! I gotto move there... This list is really flawed as whoever put it together has got NO clue about the REAL cost of living in these cities...

    August 5, 2011 at 2:27 pm |
  32. Peter

    We actually have two McDonalds in Angola, Indiana USA

    August 8, 2011 at 7:44 pm |
  33. www.evidaliahost.com

    I think that is among the so much significant info for me. And i'm happy reading your article. But want to remark on some normal things, The website style is great, the articles is in reality nice : D. Excellent task, cheers

    September 24, 2012 at 6:37 am |
  34. ppc secrets revealed

    Great publish, very informative. I'm wondering why the other specialists of this sector don't realize this. You must proceed your writing. I am sure, you've a huge readers' base already!|What's Happening i'm new to this, I stumbled upon this I have found It absolutely helpful and it has helped me out loads. I hope to give a contribution & assist other users like its aided me. Good job.

    October 22, 2012 at 7:10 pm |

Post a comment


 

CNN welcomes a lively and courteous discussion as long as you follow the Rules of Conduct set forth in our Terms of Service. Comments are not pre-screened before they post. You agree that anything you post may be used, along with your name and profile picture, in accordance with our Privacy Policy and the license you have granted pursuant to our Terms of Service.

About Business 360

CNN International's business anchors and correspondents get to grips with the issues affecting world business, and they want your questions and feedback.

 
 
Powered by WordPress.com VIP