Mercer’s 21st Annual Cost of Living Survey 2015 Says Luanda is the World’s Costliest City to Live In

- Mumbai in India, continues to be the most expensive city for expatriates

- Mumbai (74), is ranked higher and is more expensive than cities like Dallas (77), Munich (87), Luxembourg (94), Frankfurt (98) and Vancouver (119)

- South Africa, UAE, UK and USA has the highest expected increase in the number of Indian international assignees

Luanda, the capital of Angola, has been rated the world’s costliest city to live in, for the third consecutive year by Mercer’s Cost of Living Survey 2015, unveiled today. Hong Kong (2), Zurich (3), Singapore (4) and Geneva (5) top the list of most expensive cities for expatriates. Tel Aviv (18) continues to be the most expensive city in the Middle East for expatriates. Asian cities dominate the top 10 costliest cities rankings along with major cities in Switzerland in the report.

Just as foreign exchange costs create headwinds for many multinational organizations, currency fluctuations – driven by economic and political unrest – are contributing to the cost of expatriate packages for those on the front line of globalization of their organizations. Mercer’s 21st annual Cost of Living Survey 2015 finds that factors including instability of housing markets and inflation for goods and services impacts significantly on the overall cost of doing business in a global environment.

India’s most expensive city to live in, Mumbai (74), climbed 66 places in the ranking due to its rapid economic growth, inflation on the goods and services basket and a stable currency against the US dollar. Mumbai has witnessed higher inflation over the last one year as compared to other metro cities, higher cost of fuel, transportation, increased prices of food items, home services and rentals, impacting the cost of living in Mumbai. This most populous city in India is followed by New Delhi (132) and Chennai (157), which rose in the ranking by 25 and 28 spots, respectively. Bangalore (183) and Kolkata (193), the least expensive Indian cities, climbed in the ranking, as well.

Mumbai (74), is ranked higher and more expensive than cities like Dallas (77), Munich (87), Luxembourg (94), Frankfurt (98) and Vancouver (119) of the world. The world’s least expensive cities for expatriates, according to Mercer’s survey, are Bishkek (207), Windhoek (206), and Karachi (205).

“With a large number of Indian multinational organisations progressively expanding their footprint abroad, 85% of multinationals are expecting expatriate assignments to increase over the next two years to address business needs,” said Ruchika Pal, India Practice Leader, Global Mobility at Mercer. “Indian companies have been bullish on sending employees abroad and view this strategically for multiple reasons. Companies send critical and experienced talent for launching foreign investment, filling in for skill/managerial gap or for developing leaders and careers”, she further added.

“Organisations continue to recognize the importance of international assignees. What they need to evaluate even more closely is the impact of political and economic factors such as currency stability, inflation, and political instability, to balance cost versus competitiveness of the expatriate’s compensation package,” added Ms. Pal.

Many Indian companies with operations in Commonwealth of Independent States (CIS) countries remained concern in 2014 over the devaluation of currencies in Russia, Ukraine and Kazakhstan, as it had a direct impact on the cost of living and purchasing power parity. Moscow (50) and St. Petersburg (152) dropped 41 and 117 spots, respectively, as a result of Russia’s ruble losing significant value against the US dollar, lower oil prices, and a lack of confidence in the currency following Western sanctions over the crisis in Ukraine.

Across continents, countries with the highest expected increase in the number of Indian international assignees are South Africa, UAE, UK and USA.  Despite climbing 5 spots, Cape Town (200) in South Africa continues to rank as the least expensive city among these four countries, owing to the South African rand being weak against the US dollar. Dubai (23) and Abu Dhabi (33), have all climbed in this year’s ranking. Many currencies in the Middle East are pegged to the US dollar, which pushed the cities up in the ranking. Steep increase for expatriate rental accommodations particularly in Abu Dhabi and Dubai also contributed to the increase of the cities in the ranking.

Mercer's authoritative survey is one of the world’s most comprehensive, and is designed to help multinational companies and governments determine compensation allowances for their expatriate employees. Keeping New York as the base city and measuring currency movements against the US dollar, all the cities are compared against it. The survey includes 207 cities across five continents and measures the comparative cost of more than 200 items in each location, including housing, transportation, food, clothing, household goods, and entertainment. Currency fluctuations and the impact of inflation on goods and services have influenced the cost of expatriate programs as well as the city rankings.

The Americas

Cities in the United States climbed dramatically in the cost of living ranking due to the strengthening of the US dollar against other major currencies. While New York (16), the highest-ranked city in the region, remained the same as last year, cities on the West Coast, including Los Angeles (36) and Seattle (106) climbed 26 and 47 places, respectively. Among other major US cities, Chicago (42) moved up 43 places, Washington, DC (50) moved up 42 places, Honolulu (52) moved up 45 places, and Houston (92) moved up 51 places. Cleveland (133) and Winston Salem (157) were among the less expensive cities surveyed for expatriates in USA.

Europe

Aside from cities in the United Kingdom, Western European cities dropped in the rankings mainly due to the weakening of local currencies against the US dollar. While London (12) remained steady, Aberdeen (82) and Birmingham (80) rose in the ranking. Paris (46), Vienna (56), and Rome (59) fell in the ranking by 19, 24, and 28 spots, respectively. Despite moderate price increases in most of the European cities, European currencies have weakened against the US dollar which pushed most Western European cities down in the ranking. Additionally, other factors like the Eurozone’s economy, falling interest rates, and increasing unemployment have impacted these cities.

Note to Editors

The list of rankings is provided to journalists for reference and should not be published in full. The top 10 and bottom 10 cities may be reproduced in a table.

The figures for Mercer’s cost of living and rental accommodation costs comparisons are derived from a survey conducted in March 2015. Exchange rates from that time and Mercer’s international basket of goods and services have been used as base measurements.

Governments and major companies use data from this survey to protect the purchasing power of their employees when transferred abroad; rental accommodation costs data is used to assess local expatriate housing allowances. The choice of cities surveyed is based on the demand for data.

About Mercer

Mercer is a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC), a global professional services firm offering clients advice and solutions in the areas of risk, strategy and people. Mercer’s more than 20,000 employees are based in more than 40 countries and the firm operates in over 130 countries. With 57,000 employees worldwide and annual revenue exceeding $13 billion, Marsh & McLennan Companies is also the parent company of Marsh, a leader in insurance broking and risk management; Guy Carpenter, a leader in providing risk and reinsurance intermediary services; and Oliver Wyman, a leader in management consulting.

For more information, visit www.mercer.com. Follow Mercer on Twitter @MercerInsights.

Mercer also provides advice and market data on international and expatriate compensation management, and works with multinational companies and governments worldwide. It maintains one of the most comprehensive databases on international assignment policies; compensation practices; and data on worldwide cost of living, housing, and hardship allowances. Its annual global mobility conferences and other events provide companies with the latest trends and research on mobility issues.

Visit www.imercer.com/mobility for details. Follow Mercer’s mobility news on Twitter @MercerMobility.

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