Living costs go skyward in the most expensive cities for expats
Lists are morphing and taking on new meaning as costs rise, lifestyles change and more people work remotely
Article content
The annual top 10 lists of most-expensive cities in the world have become predictable. Most surveys include New York, Hong Kong, Singapore, Tokyo, San Francisco, Geneva, London and Los Angeles. Occasionally, Sydney, Zurich, Osaka or Tel Aviv might also appear.
But today’s lists are starting to morph and take on new meaning, impacted by a higher cost of living and changing lifestyles and quality of living. Basically, the world has changed since the prepandemic years, when relocating for one’s job or business was a requirement of success.
For starters, the world is more expensive due to supply-chain shortages, higher interest rates and inflation. That means the indexes of consumer goods and housing costs, often used to rank cities, have shot upward. The Economist Intelligence Unit’s Worldwide Cost of Living report released last year cited average prices across 172 cities surveyed as being the highest they’d seen in 20 years of collecting data.
The cost of living index from Mercer was topped last year by Hong Kong, followed by Swiss cities Zurich, Geneva, Basel and Bern. Also included were Tel Aviv, New York City, Singapore, Tokyo and Beijing. Mercer looks at cost of rent, transportation, utilities, food, personal care, entertainment and other items. See the full lists here.
“There are always some repeat offenders,” says Mercer’s Taryn Kramer, growth and transformation leader and a principal based in Charleston, S.C. “Hong Kong is one we consistently hear of being very expensive from a cost-of-living perspective.”
An example: Hong Kong
In Hong Kong’s central areas, a 400-square-foot apartment can easily rent for C$4,000 a month. Buying that apartment would cost C$1 million to C$2 million.
Chris Oliver is an expat who has lived in Hong Kong for 20-plus years working as an editor. He owns property in Canada but not Hong Kong. Groceries are expensive there because most items are imported. But overall, he finds it cheaper to live in Hong Kong than Vancouver.
“The property and rental rates are high, but the other costs like eating out and taxi fares are relatively inexpensive,” says Oliver. “Remember, we don’t tip here for food servers or for cab drivers. Also, we get free medical care, so we don’t need to have insurance, like in the U.S. … And there is no sales tax.”
But if a foreigner does buy property in Hong Kong, the taxes are mercifully low, says Oliver.
Property ownership in Switzerland
In picturesque Swiss cities such as Bern or much bigger Geneva, foreigners aren’t even allowed to purchase property.
“Foreigners are only permitted to buy in some of the ski resorts,” says Simon Malster, managing director of the international sales and marketing agency Investors In Property, based in Britain. He’s been selling ski chalets and apartments in the Alps for more than 35 years.
As well, foreigners are not permitted to buy chalets of more than 250 square metres (about 2,700 square feet), says Malster. Wealthy foreigners are able to buy a property in a resort such as Verbier, about two hours from Bern and Geneva, he says. Properties there are expensive but in big demand, and a sound investment.
“Almost all the properties are available to foreigners in this resort, so it’s a good choice for those who have the budget,” he says. Swiss cities are known for their high rents and high cost of living, but Swiss salaries are also high.
Foreigners welcome in New York
In New York, meanwhile, foreign buyers are welcomed with open arms, says Dottie Herman, vice chair of the Douglas Elliman brokerage firm. As the pandemic ends, higher property prices are returning. “It’s come back, and rents are high, and prices are coming close to 2019 [values],” Herman says.
The only hurdles that expats might face, she says, are the super-restrictive rules of some co-op buildings. Condos are easier to buy. Many foreign buyers in New York buy condos and rent them out, a popular investment choice because property values tend to appreciate over time, and rents are high.
“Even though inventory is tight and rents are higher than any place, they are not at all discouraging [foreign buyers],” says Herman.
Working from home
But there’s a cultural shift under way that might be leading to fewer people relocating for work, says Kramer. At the peak of COVID, people left their jobs en masse, either retiring early or opting for something new. As a result, there is a talent shortage. It’s a far more employee-oriented world now, she says. (Mercer is a global company that offers human resources and asset management to its clients.)
Kramer says the pandemic has changed the employment landscape in several positive ways.
For one, working remotely has become an option, which can make relocation unnecessary. “Companies that would never have imagined allowing for remote workers or virtual workers are really pivoting because they are having challenges in attracting the right talent for the roles they need to fill,” says Kramer. “Employees really are in a position to dictate where they go, how they work and when they work, versus maybe 10 years ago.”
The shift away from relocating began even before the pandemic, she says.
“Even prepandemic, we were seeing a bit of a shift in folks not necessarily accepting relocation opportunities, or requesting support above and beyond what we would typically see in a policy for relocation support.” That support might include career-search help for spouses and partners.
Quality of life, too
Mercer also surveys cities that offer a high standard of living. In a super-competitive jobs environment, after all, cost of living is only one factor.
A Mercer infographic shows that Vancouver, Toronto, Stockholm, Helsinki, Oslo, Amsterdam and Vienna rank in the middle when it comes to cost of living, but they are the highest on an eco-city index that looks at criteria such as air pollution and water quality. Zurich and Singapore cost more, but also rank highest on the eco-city index.
Meanwhile, Los Angeles, New York and Tokyo rank lower on the index and cost more. Hong Kong, Shanghai, Beijing and Tel Aviv rank even lower on the index and are expensive.
Kramer says companies offer a hardship allowance when recruiting employees for cities where quality of living is low.
Mercer’s highs and lows worldwide
Top 10 and bottom 10 most expensive cities in the world, as determined by Mercer, which surveys rents, transportation, utilities, food, personal care, entertainment and other items.
Top 10
1. Hong Kong
2. Zurich, Switzerland
3. Geneva, Switzerland
4. Basel, Switzerland
5. Bern, Switzerland
6. Tel Aviv, Israel
7. New York City
8. Singapore
9. Tokyo
10. Beijing
Bottom 10
227. Ankara, Turkey
226. Bishkek, Kyrgyzstan
225. Dushanbe, Tajikistan
224. Islamabad, Pakistan
223. Karachi, Pakistan
222. Istanbul, Turkey
221. Tashkent, Uzbekistan
220. Tunis, Tunisia
219. Almaty, Kazakhstan
218. Algiers, Algeria
More from Canadian Family Offices:
- ‘I wish I had known’: Advisor makes hay out of bad business exit
- At sixth-generation egg farm, women crack the code for success
- Estate-plan pitfalls for the 1 million Americans living in Canada
- How to increase value, and other tips for selling your company
Please visit here to see information about our standards of journalistic excellence.