The city of Tokyo retakes the global top spot as world’s most expensive location for expatriates. The city rose by 11 places since last year to top the global rankings for the first time since 2012.
“For companies bringing talent into Japan the cost of an assignment will increase as higher allowances are required to maintain employees’ purchasing power. On the other hand, companies sending employees out of Japan can pay lower cost of living allowances and still provide sufficient remuneration to maintain their standard of living,” said Lee Quane, Regional Director – Asia, ECA International.
All four of the ranked locations in Japan rose in the regional and global rankings. Within Japan, Tokyo ranks number one globally and is just ahead of Yokohama (5th), Nagoya (7th) and Osaka (9th).This is according to findings published in the latest Cost of Living survey by ECA International, the world’s leading provider of knowledge, information and software for the management and assignment of employees around the world.
To ensure that an employee’s spending power is maintained when they are sent on international assignment, a cost of living allowance is often provided as part of the pay package. This allowance will be affected by differences in inflation levels as well as exchange rate movements between the employee’s home and host countries.
Singapore moves up two places from last year’s rankings at 18th spot, to become the sixteenth most expensive location in the world for expatriates. Malaysian locations have also risen in the global rankings with Kuala Lumpur climbing 14 places to 192nd position in the global ranking.
“The Singapore dollar has appreciated against most major currencies in the months leading up to our survey. Despite low price rises, the impact of the stronger currency means that where companies provide cost of living allowances to their international executives assigned to Singapore, these will likely need to be raised to ensure that employee purchasing power is maintained”, said Quane. “Over the past five years, Singapore has continued to rise in the ECA global rankings from 33rd in 2011, up 17 places to 16th in 2016”.
Hong Kong is now the 11th most expensive location in the world for expatriates, falling from 9th place last year. Over the past five years, Hong Kong has generally risen in the ECA global rankings from 60th in 2011, up 49 places to 11th in 2016.
From a regional perspective, it is the fifth most expensive location in Asia Pacific with only Japanese locations ranking higher, down from third place this time last year. The relative strength of the Japanese yen in the survey period, pushed all Japanese cities above Hong Kong in the rankings.
Shanghai, which was ranked as the most expensive location for expatriates in the Asia Pacific region a year ago, has moved down six places to seventh. Within China, Shanghai (13th globally) is just ahead of Beijing (15th), Guangzhou (25th) and Shenzhen (32nd). 13 out of the 14 ranked Chinese cities sit in the global top 50 most expensive locations for expatriates, with only Xiamen ranking just outside at 51st.
“We have seen a small depreciation of the renminbi against the yen and HK dollar over the past year and this has led to Shanghai and Beijing falling below Tokyo and Hong Kong in the rankings,” Quane added.
“However, this does not truly follow the general trend seen in China over the past five years, during which locations in Mainland China have averaged an 88 place increase in the global rankings. It is likely that major Chinese cities will remain expensive destinations for mobile employees for the foreseeable future.”
Australian locations also increased in the rankings, by an average of 42 places compared to last year – a reflection of the stronger Australian dollar, following an improved economic outlook domestically and from China over the survey period. Sydney remains the most expensive city in Australia at 53rd in the global rankings.
ECA International has been conducting research into cost of living for more than 40 years. It carries out two main surveys per year to help companies calculate cost of living allowances so that their employees’ spending power is not compromised while on international assignment.
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