International Cost of Living July 2016

Hong Kong is the most expensive city in the world for an expatriate professional migrant to live in 2016.

An Expatriate is defined as “a person who lives outside their native country” [Oxford Dictionary]. The word comes from the Latin terms ex ("out of") and patria ("country, fatherland"). A more modern description of an expatriate is perhaps a “professional migrant”, someone who voluntarily lives outside their country in order to take up a job opportunity and a better or at the very least a similar, quality of life. An expatriate professional migrant is different to an immigrant in that they intend returning to their home country and do not therefore consider themselves to be local in their host country.

This quarterly survey by Xpatulator.com of cost of living world-wide is based on expatriate professional migrant spending as opposed to local people’s spending. The difference between these two groups is that an expatriate professional migrant tends to pay a premium for “international” brands ideally from their home country, and they tend to make use of premium service providers such as up-market medical practices, international schools, and most prefer to live in exclusive, secure accommodation in order to maintain the quality of life to which they are accustomed back home. The survey covers over 200 items grouped into 13 cost of living baskets.The cost of living information is used by Xpatulator.com subscribers to calculate cost of living differences between global home and host locations for expatriate professional migrants. Cost of living differences are key to calculating expatriate pay for international assignments.

The top 10 most expensive cities in the world from 2010 to 2016 are as follows:

The top ten most expensive cities in the world comprise three from Asia-Pacific (Hong Kong (1); Singapore (4); Tokyo (8)), three from Africa (Luanda (2); Asmara (3); Kinshasa (10)), three from Europe (Zurich (5); Geneva (6); Oslo(7)), and one from America (Hamilton(9)).

In Hong Kong the very high cost of housing and healthcare, as well as the strong Hong Kong dollar which is fixed against the US Dollar, are the main reasons for it being the world's most expensive city. An interesting observation is the fact that if 4 of the 13 baskets are excluded from the cost of living index calculation (namely Housing, Education, Medical and Transport) then Hong Kong drops down to be only the 60th most expensive city in the world. This illustrates that not everything in Hong Kong is expensive. It is therefore very important it is to ensure that the correct baskets are included in a cost of living index calculation. In running Xpatulator.com reports users will see that any of the 13 baskets can be included or excluded as needed. If for example an expatriate professional migrant is provided with housing, education (schooling for children) and medical insurance by their employer, then these baskets should be excluded from the cost of living calculation. Only those baskets that the employee will spend their salary on should be included in a cost of living index for an international assignment.

Luanda in Angola is the second most expensive city in the world for expatriate professional migrants to live. As opposed to Hong Kong, everything in Luanda is expensive as almost all international standard goods and services are imported. Despite the lower oil price, the slow-down in oil related projects, and dramatic reduction in revenue to Angola in 2016, prices in Luanda remain extremely high, largely as a result of the weaker Angolan Kwanza (down approximately 40% against the US Dollar in the past year).

Asmara in Eritrea is the third most expensive city in the world for Expatriate’s to live. There are however very few Expatriate’s in Asmara, a city of around 649,000 people in a country of approximately 6 million. Asmara is a place of old and new. Much of Eritrea is dry and rugged, however it produces locally grown fruit. Eritrea has four recognised religions comprising Eritrean Orthodox, Roman Catholic, Lutheran, and Sunni Islam. Eritrea is crowded with religious buildings, with churches and mosques sometimes standing side by side. About half of Eritrea's population is Muslim, the other half Christian. Years of war, the 17 year long state of emergency and extreme poverty mean that the cost of maintaining a secure Expatriate life-style is very expensive. Local Eritreans are conscripted on completion of high school. Most are then assigned state jobs for very low pay in global terms ($10 to $200 a month) and are not allowed to change jobs or leave the country until they are demobilized, as a result many citizens leave illegally. While people with Eritrean passports cannot leave legally without an exit visa, Expatriates with foreign passports so they can leave when they want. Almost all goods and services for Expatriates are imported and suitable housing and international schooling is limited. The Economy of Eritrea has experienced considerable growth in recent years with a high growth rate and extensive resources such as copper, gold, granite, marble, and potash.

Xpatulator.com has been created to calculate expatriate pay using online calculators and an extensive database of cost of living and hardship indexes, for 780 international locations. The database is updated quarterly. Subscribers use this information to ensure expatriate salary spending power is maintained when on an international assignment. Salary spending power is affected by cost of living, hardship and exchange rate differences between the home and host location.