Hong Kong is the world’s most expensive city, joined by four other Asian cities in the top 10. Chinese cities, including Shanghai (7th) and Beijing (10th), dropped in the rankings due to a weaker yuan. Singapore holds the fourth spot, while Tokyo climbed to fifth from 11th.
Mercer Cost of Living Survey – Worldwide Rankings 2016
(The Mercer international basket, including rental accommodation costs)
| Rank as of March | City | Country | 2015 | 2016 |
|---|---|---|---|---|
| 2 | 1 | HONG KONG | Hong Kong | |
| 1 | 2 | LUANDA | Angola | |
| 3 | 3 | ZURICH | Switzerland | |
| 4 | 4 | SINGAPORE | Singapore | |
| 11 | 5 | TOKYO | Japan | |
| 13 | 6 | KINSHASA | Dem. Rep. of the Congo | |
| 6 | 7 | SHANGHAI | China | |
| 5 | 8 | GENEVA | Switzerland | |
| 10 | 9 | NDJAMENA | Chad | |
| 7 | 10 | BEIJING | China |
Mercer’s 22nd annual Cost of Living Survey reveals that factors like currency fluctuations, inflation of goods and services, and unstable housing costs influence the overall cost of expat packages.
“Even with technological advancements and a globally connected workforce, sending employees abroad remains crucial for competitive multinational companies,” said Ilya Bonic, Senior Partner and President of Mercer’s Talent business. “However, volatile markets and slow economic growth in many regions require a sharp focus on cost management, particularly for expat compensation. As companies seek rapid global expansion, accurate and transparent data is essential to ensure fair compensation for all assignment types, including short-term and local plus statuses.”
Mercer’s 2016 Cost of Living Survey ranks Hong Kong as the most expensive city for expatriates, pushing Luanda, Angola, to second place. Zurich, Switzerland, and Singapore hold the third and fourth spots, respectively. Tokyo, Japan, rose six places to fifth. Other Asian cities in the top 10 include Shanghai (7th) and Beijing (10th).
Mercer’s comprehensive survey aids multinational companies and governments in shaping compensation strategies for their expatriate employees. Using New York City as the base for comparison and measuring currency fluctuations against the US dollar, the survey covers over 375 cities. This year, 209 cities across five continents were analyzed, comparing the cost of over 200 items, including housing, transportation, food, clothing, household goods, and entertainment.
“Limited resources and global talent shortages make maximizing ROI challenging for multinationals,” said Bonic. “To achieve business goals, organizations must ensure they can support necessary relocations by offering fair and competitive compensation packages.”
Bonic highlighted that the cost of goods and services fluctuates with inflation and currency volatility, making overseas assignment costs unpredictable. However, low inflation has resulted in relatively stable cost increases globally.
Asia Pacific
Hong Kong (1st) became the priciest city for expats in Asia and globally, as Luanda’s ranking dropped due to its weakening currency. Singapore (4th) remained stable, while Tokyo (5th) jumped six spots. They are followed by Shanghai (7th) and Beijing (10th). Shenzhen, China (12th), rose two places, while Seoul, Korea (15th), and Guangzhou, China (18th), fell seven and three spots, respectively.
Mario Ferraro, Global Mobility Leader for Asia, Middle East and Africa (AMEA) at Mercer, noted, “Many Asian cities remain among the world’s most expensive for expat assignments. However, this hasn’t deterred companies from relocating talent here, as the region continues to offer growth potential and high demand for skilled professionals. With the ASEAN Economic Community (AEC) established on January 1st, the region represents a US$2.6 trillion market, drawing companies to Southeast Asia. Singapore is often chosen as the regional hub for this vast market due to its talent pool and infrastructure.”
“The strengthening Japanese yen pushed Japanese cities up the ranking,” said Nathalie Constantin-Métral, Principal at Mercer and survey ranking compiler. “Conversely, Chinese cities dropped due to the yuan’s weakening against the US dollar.”
Mumbai (82nd) is India’s most expensive city, followed by New Delhi (130th) and Chennai (158th). Kolkata (194th) and Bangalore (180th) are the least expensive Indian cities ranked. Elsewhere in Asia, Bangkok, Thailand (74th), Kuala Lumpur, Malaysia (151st), and Hanoi, Vietnam (106th), plummeted twenty-nine, thirty-eight, and twenty places, respectively. Baku, Azerbaijan (172nd), experienced the most dramatic fall, plummeting over a hundred places. Ashkhabad, Turkmenistan, climbed sixty-one spots to rank 66th globally.
Australian cities witnessed significant drops due to their currency’s depreciation against the US dollar. Brisbane (96th) and Canberra (98th) dropped thirty and thirty-three spots, respectively. Sydney (42nd), Australia’s most expensive city for expats, had a moderate drop of eleven places, while Melbourne fell twenty-four spots to rank 71st.
The Middle East
In the Middle East, Dubai, UAE, ranked 21st, with Abu Dhabi, UAE (25th), and Beirut, Lebanon (50th) also in the top 50. Jeddah, KSA (121st), remains the region’s least expensive city despite rising thirty places. “Several Middle Eastern cities jumped in the ranking, pushed up by other cities’ declines and the strong increase in expat rental costs, especially in Abu Dhabi and Jeddah,” said Constantin-Métral.
Interested?
Mercer provides individual cost of living and rental accommodation cost reports for each surveyed city. Learn more about city rankings.
*Data for Mercer’s cost of living and rental accommodation comparisons are from a March 2016 survey. Exchange rates from that period and Mercer’s international basket of goods and services from its Cost of Living survey served as base measurements.