Five Asian cities—Hong Kong (ranked 2nd), Tokyo (3rd), Singapore (5th), Seoul (6th), and Shanghai (8th)—were named among the top 10 most expensive cities for expatriates in this year’s ranking.

Currency fluctuations played a significant role in shaping the rankings of most Asian cities.

While all mainland Chinese cities surveyed experienced a drop in ranking, Tianjin (12th) stood out as an exception, climbing 18 positions.

Mumbai, India made a remarkable jump of 25 places this year, attributed to robust economic growth, inflation, and a stable currency.

Mercer’s yearly Cost of Living Survey revealed that five Asian cities are among the priciest locations for employees working abroad:

To better support the increasing number of international assignees working across a wider range of locations, organizations are now taking cultural perspectives into account when evaluating assignments, preparing for both regional and lateral moves, and adjusting compensation strategies to remain competitive.

Mercer’s 2017 Global Talent Trends Study highlights that fair and competitive compensation, along with opportunities for career advancement, are paramount for employees this year. Consequently, multinational companies are carefully reviewing the cost of expatriate packages for their international assignees.

The 23rd annual Cost of Living Survey conducted by Mercer indicates that factors such as volatile housing markets and inflation affecting goods and services contribute to the overall expenses associated with conducting business in today’s globalized world. Ilya Bonic, Senior Partner and President of Mercer’s Career business, emphasized that “The globalization of the marketplace is widely recognized, with numerous companies operating in multiple locations worldwide and promoting international assignments to enrich the experience of future leaders.”

“There are numerous benefits, both personal and organizational, to sending employees overseas, whether for short-term or long-term assignments. These include fostering career development through global exposure, facilitating the acquisition and transfer of skills, and enabling the strategic reallocation of resources.”

Mercer’s 2017 Cost of Living Survey identifies Asian and European cities as the most expensive for expatriates, notably Hong Kong (2nd), Tokyo (3rd), Zurich (4th), and Singapore (5th). Luanda, Angola’s capital, claims the top spot as the costliest city overall, primarily due to the high cost of goods and security concerns. Other Asian cities featuring among the top 10 most expensive for expatriates include Seoul (6th) and Shanghai (8th).

“While organizations have traditionally managed mobility, talent management, and rewards separately, they are now adopting a more integrated approach to enhance their mobility strategies. Compensation plays a crucial role in attracting talent and remaining competitive, and it must be determined fairly based on the cost of living, currency fluctuations, and location,” Bonic added.

Asia Pacific

Five of the top 10 cities in this year’s ranking are situated in Asia. Hong Kong (2nd), despite dropping from its previous top spot, retains its position as the most expensive city in Asia. This is largely attributed to its currency’s peg to the US dollar, which has led to a surge in local accommodation costs. Tokyo (3rd), Singapore (5th), Seoul (6th), and Shanghai (8th) follow closely behind this global financial hub.

Mario Ferraro, Global Mobility Leader for Asia, Middle East, and Africa (AMEA) at Mercer, remarked, “Despite the high cost of living in several Asian cities, major financial centers like Hong Kong and Singapore continue to be magnets for talent and remain highly sought-after relocation destinations. Although currency fluctuations, particularly against the US dollar, were the primary drivers behind this year’s shifts, cities like Mumbai have ascended the rankings due to their strengthening economies and expanding opportunities.”

Nathalie Constantin-Métral, Principal at Mercer, who oversees the survey ranking, noted, “The weakening of the Chinese yuan against the US dollar contributed to the decline in ranking for most Chinese cities. Conversely, the strengthening of the Japanese yen, coupled with the high cost of consumer goods for expatriates and a dynamic housing market, propelled Japanese cities upwards in the ranking.”

Mumbai (57th), India’s most expensive city, ascended 25 places in the ranking. This can be credited to its rapid economic expansion, inflation impacting the cost of goods and services, and a stable currency exchange rate against the US dollar. Following India’s most populous city are New Delhi (99th) and Chennai (135th), which climbed 31 and 23 spots, respectively. Bengaluru (166th) and Kolkata (184th), recognized as the most affordable Indian cities, also moved up in the ranking.

Elsewhere in Asia, Bangkok (67th) leaped seven places from the previous year. Jakarta (88th) and Hanoi (100th) also experienced upward movement, rising by five and six places, respectively. Karachi (201st) and Bishkek (208th) remain the most affordable cities for expatriates in the region.

Australian cities have continued their upward trajectory in the global ranking since last year, largely due to the Australian dollar’s strengthening. Sydney (25th), Australia’s costliest city for expatriates, climbed 17 places. Melbourne (46th) and Perth (50th) followed suit, ascending 25 and 19 spots respectively.

In the Middle East, Dubai (20th) leads the pack, trailed by Abu Dhabi (23rd) and Riyadh (52nd), all of which saw their rankings climb this year. Jeddah (117th), Muscat (92nd), and Doha (81st) stand out as some of the most budget-friendly cities in the region for expatriates.

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*Mercer’s survey is intended to assist multinational corporations and governments in determining suitable compensation allowances for their expatriate personnel. New York City serves as the base city for comparison, and currency fluctuations are measured against the US dollar. The survey encompasses over 400 cities spanning five continents and assesses the comparative cost of more than 200 items in each location. These items include housing, transportation, groceries, apparel, household goods, and entertainment expenses. The data used for Mercer’s cost of living and rental accommodation comparisons are derived from a survey conducted in March 2017. Exchange rates prevalent at that time and Mercer’s standardized international basket of goods and services serve as the baseline for these measurements.