Hong Kong drops from top 5 most expensive locations globally

Hong Kong is now the sixth most expensive location for expats to live, falling from fourth place last year. This was one of the findings of the latest Cost of Living Survey published on 2 July 2020 by ECA International. The SAR has dropped slightly after falling behind the Swiss cities of Basel and Bern and now sits outside of the top 5 most expensive locations. Lee Quane, Regional Director - Asia, ECA International said, "Despite political and social unrest throughout 2019, coupled with the impact of Covid-19 making some people more reluctant to move to the SAR, Hong Kong has only seen a small drop in the global rankings amid the uncertainty. Although Bern and Basel have overtaken it, Hong Kong is still one of the most expensive places for overseas workers to live and is still more expensive than other Asian expat hubs such as Tokyo and Singapore."

Lee Quane, Regional Director, Asia at ECA International

Key takeaways

• Hong Kong drops two places to the sixth most expensive location in the world for expats to live

• Hong Kong falls behind Swiss cities Bern and Basel but remains in the global top ten

• Tokyo stays one place behind in 7th, while Singapore drops to 14th

• Ashgabat, Turkmenistan remains the most expensive location in the world for expatriates

ECA's Cost of Living Survey compares a basket of like-for-like consumer goods and services commonly purchased by international assignees in over 480 locations worldwide. The survey allows businesses to ensure that their employees' spending power is maintained when they are sent on international assignments. Certain living costs, such as accommodation rental, utilities, car purchases and school fees, are usually covered by separate allowances. Data for these costs are collected separately and are not included in ECA's cost of living basket. ECA International has been researching the cost of living for over 45 years.

Asia Highlights
Chinese cities all dropped in the most recent cost of livings rankings this year, including Beijing and Shanghai which both fell nine places to which fell to 24^th and 19^th places respectively. Quane said, "Chinese cities have all fallen across the board in our latest rankings due to signs of a weakening economy and poorly performing currency. One of the key factors in this was undoubtedly the outbreak of Covid-19. Still, it should also be noted that the yuan was performing poorly before this period too, with the outbreak of coronavirus exacerbating the relative weakness of the Chinese currency against other major currencies."

The cost of living in the Republic of Korea has also been hit by Covid-19, with Seoul falling from 8^th place to 17^th in the global rankings, and Busan dropping out of the top 20 entirely. Quane said, "The change in the cost of living in Korean cities is due to the outbreak of Covid-19 and the uncertainty that surrounded the country at the time of the survey. A quick lockdown, coupled with the high rates of infection that Korean cities saw towards the end of February meant that the confidence in the South Korean won faltered, making the country cheaper for expats living in the country."

Singapore, however, has remained steady in the rankings, down just two places to 14^th in the rankings. Quane said, "Although Singapore has dropped very slightly in the global rankings as two Japanese cities have edged above it, Singapore remains an expensive location for overseas workers to be based. The Singapore dollar has remained strong in recent years, sitting below only Hong Kong and Japanese cities in terms of the most expensive Asian locations for expats."

Thai and Vietnamese cities once again continued to move up the rankings, with Bangkok rising 64 places in five years and Hanoi up 25 places over the same period. Quane said, "Thailand's steady rise up our rankings has been a constant feature of our surveys in recent years as its economy has continued to grow and attract increasing investment from overseas businesses, meaning that the baht has strengthened considerably - making the country more expensive for expats and tourists. However, this trend has slowed over the past year, partly in response to government attempts to weaken the baht to keep the country competitive."

Global Highlights
The vast majority of US cities saw rises in the rankings as the US dollar continued to perform well against other major currencies. Quane noted, "The recent strength of the US dollar has been reflected in nearly all US cities moving up in the rankings, with New York and Honolulu now entering the global top 20. In uncertain times, as we are seeing currently with Covid-19 and with a global recession around the corner, many people will put their money into what is seen as 'safe haven' economies such as the US. As a result, the US dollar has strengthened – making things more expensive for expats than in the past."

Many European cities saw drops in the cost of living as the value of the euro dropped slightly from the last survey. Major European cities such as Berlin, Madrid and Rome have continued to fall in the rankings and remain outside of the top 100 most expensive cities for overseas workers.

Australian cities experienced some of the most significant falls in the rankings this year, with every Australian city seeing a drop of over 20 places. Sydney is now the only Australian city in the top 100 most expensive locations but still saw a drop of 24 places to 97^th place. Quane said, "The Australian dollar has weakened by almost 7% over the past twelve months against the US dollar and almost 5% against the euro while inflation also remains low, meaning that foreign assignees in Australia will now see their money stretch a lot further than previously. The reason for this is mainly due to concerns over the reliance of the Australian economy on China, which, even before the coronavirus outbreak, has been showing some signs of slowing growth."

Ashgabat, Turkmenistan was once again the most expensive location in the world for expats as prices increased by 30% in the year to March. However, while the manat is still officially pegged to the US dollar, it should be noted that there is an illegal but active black-market exchange rate in the city.

Top ten most expensive locations for expatriates - Global

Top ten most expensive locations for expatriates – Asia