Week of July 7, 2003
Snapshot from the Field
LOOKING FOR A PREVIOUS STORY? CHECK THE ARCHIVE.
Tokyo World's Priciest City;by JACK LYNE, Site Selection Executive Editor of Interactive Publishing
U.S. Metros Now More Affordable
NEW YORK So you're looking for a site with living costs so enticingly low that they'll be simply irresistible to the key executives you'll have to transfer to the new facility?
Asuncion, Paraguay, just might not leap to mind. The South American city, though, is the world's least expensive city for cost of living, according to a new survey from New York-based consultancy Mercer Human Resource Consulting (www.mercerhr.com). On the other hand, if employee living costs are a trifle tossed out with the does-not-apply trash, then there's Tokyo. The Japanese capital ranked as the world's most expensive cost-of-living city.
Between Asuncion and Tokyo lies a vast cost discrepancy in Mercer's survey, which ranked 144 world cities, using New York as the "base city" with a score of 100.
Based on the 200-plus items priced in each location, Tokyo registered a cost-of-living score of 126.1. Asuncion, by comparison, is practically in another cost-of-living universe, with a score of 36.5.
New York-based Mercer annually conducts its cost-of-living surveys of cities selected "based on the demand for corresponding data from companies and government organizations," researchers explained. The studies, they added, are designed "to protect the purchasing power of governments and major companies' employees [who are] transferred abroad."
2003's report revealed a topsy-turvy hierarchy in purchasing-power oomph.
"This year, the changing global economic environment has had a major impact on the cost-of-living index," explained Mercer Senior Researcher Yvonne Traber. "The depreciation of the U.S. dollar against the Euro, high inflation and economic recession in many countries have modified the scores of a number of cities."
Many European Cities' Living Costs Soar2003's most dramatic inflationary modifications came in European cities. Europe repeated with two of the top 10 most-expensive cities: Moscow, which again claimed the No. 2 slot, and London , which made a three-slot move-up to No. 7. (See accompanying top 20 chart.)
Two other Swiss cities in the top 10, though, reflect European cities' pivotal role in upsetting 2003's cost-of-living apple cart. Last year's No. 28, Geneva moved up 22 places to finish as this year's No. 6 most-expensive city. No. 9 Zurich moved up 23 spots from 2002's No. 32 finish.
"The strengthening of the Euro has pushed prices up in European Union cities, making them expensive for overseas visitors," explained Rebecca Powers, an international consultant in Mercer's San Francisco office.
Three more of Europe's eight top 20 cities registered major living-cost increases: No. 13 Oslo moved up from 2002's No. 40; No. 15 Copenhagen rose from No. 62 , and No. 17 Milan advanced all the way from No. 63.
In contrast, non-euro-zone St. Petersburg reflected the other side of the common-currency coin. While its score dropped only 1.3 percent, areas cresting on the euro's rise dropped the Russian city from No. 8 to 2003's No. 12.
Other European cities, though, recorded even more dramatic living-cost increases.
The something burning in Rome, for example, might have been expatriates' pockets coping with decreased purchasing power. Rome rose a full 58 slots, from 2002's No. 99 rank to this year's No. 41. Other European cities with substantial 2003 living-cost increases included: No. 21 Dublin, up 52 slots; No. 23 Paris, rising 51 places; No. 34 Vienna and No. 35 Helsinki, both up 43 positions; and No. 52 Amsterdam, climbing 50 spots.
Only Two U.S. Cities
For example, New York, the most expensive American city, dropped from No. 7 overall to 2003's No. 10. The only other U.S. city in 2003's top 20 was White Plains, N.Y., 25 miles (40 kilometers) from New York. Even so, White Plains dropped four slots to No. 20.
The next most-expensive U.S. cities are No. 22 Los Angeles, No. 25 Chicago, No. 27 Miami and No. 30 San Francisco.
In contrast, Winston-Salem, N.C., was the survey's lowest-cost U.S. city; its 67.7 score ranked No. 93. The next least-expensive U.S. cities were Portland (92nd), Pittsburgh (88th), Cleveland (88th) and St. Louis (82nd). (See accompanying chart.)
Here's a look at how other areas fared in Mercer's cost-of-living survey.
Asia Has Half of World's
Asia, in fact, took half of the top 10 slots. After No. 1 Tokyo were No. 2 Osaka, Japan, which moved up three slots, and No. 4 Hong Kong, which dropped four slots. Beijing took No. 5, with Seoul at No. 8.
Asian cities also took five of the 11-20 spots. Shanghai finished at No. 11, and two Vietnamese cities, Hanoi and Ho Chi Minh City, ranked 14th and 16th, respectively. Two Chinese cities, Shenzhen and Guangzhou, made the top 20, tying for 18th.
Canada: In contrast, Canadian costs looked like a bargain-basement sale for expat living costs.
None of the surveyed Canadian cities, in fact, finished among 2003's 100 most-expensive locations. No. 104 Toronto and No. 110 Vancouver had the highest scores, followed by No. 116 Calgary, No. 120 Montreal and No. 127 Ottawa. Australia/New Zealand: The lands down under also ranked low for expat living costs.
No. 67 Sydney was the only Australian city among the 100 most expensive. Melbourne, by comparison, finished 111th, followed by Brisbane at 122nd, Adelaide at 124th and Perth at 126th.
New Zealand's Auckland and Wellington performed along the same lines, finishing 115th and 117th, respectively.
Latin America: Buenos Aires'
A prime example is Brazil, the region's linchpin economy. The nation has been buffeted by its currency's nosedive and political uncertainties, particularly vis-à-vis its presidential elections. As a result, living costs in Sao Paulo and Rio de Janeiro now rank 136th and 137th, respectively.
But the Argentine capital of Buenos Aires ranked even lower. With its 44 score, Buenos Aires is now 141st among 144 cities. That marks a particularly precipitous fall, explained Solange Borst of Mercer's Buenos Aires office.
"Just three years ago, Buenos Aires was ranked the 18th most expensive city in our cost-of-living comparison, with a score of 91," he said. The city's "deep dive," Borst added, stemmed from "the massive economic crisis and the resulting currency devaluation."
Peru's far more stable economy, in contrast, is reflected in Lima's ranking. The Peruvian city is South America's most expensive, albeit at a modest 108th.
In Mexico, a sharp currency devaluation pushed down living costs in Mexico City, 28th last year, and Monterrey, 38th last year. With the peso's plunge, Mexico City fell to 77th, with Monterrey 98th.
Havana ranked as the survey's most expensive Latin American city, with a score of 86.5. That position, however, came with a caveat from Mercer researchers: "Havana remains particularly high in the ratings due to the fact that Mercer only collects prices in shops using U.S. dollars as currency."
Johannesburg Moves UpOther low-expensive locales: In addition to No. 144 Asuncion and No. 141 Buenos Aires, 2003's least expensive cities were No. 143 Harare, Zimbabwe; No. 142 Bogota, Columbia; and No. 140 Blantyre, Malawi.
The survey's lower ranks also shifted a bit. Johannesburg, South Africa, for example is no longer the world's cheapest city. Last year's No. 144, the African city's 50.9 score moved it up to 133rd.
Mercer's study will likely assist some firms in determining locations most likely to appeal to transfers.
But the perspective is sometimes quite different in areas where rankings took a deep drop.
"On the one hand, the devaluation of the local currency causes a decrease in the costs in U.S. dollars," said Marco Santana of Mercer's Sao Paolo office. "But on the other hand, it represents a loss of international purchasing power for local people."
©2003 Conway Data, Inc. All rights reserved. Data is from many sources and is not warranted to be accurate or current.