Where is the world’s most expensive city? London, where garages can sell for half a million pounds? Or Paris, where hotels, restaurants and boutiques cater to almost 50 million tourists a year in the world’s most visited city?
The answer, according to Mercer’s annual Cost of Living survey, might not be what you would expect: the consultancy puts Luanda, in Angola, in first place in its 2015 survey of how expensive 200 world cities are for expatriate employees. A pair of jeans apparently costs in excess of $240, and a basic fast-food meal will set you back $18.95 – in a sub-Saharan country where millions get by on less than $2 a day, and which the World Bank rates as the seventh worst in the world for income equality.
Why? The answer lies in the oil industry, which accounts for more than half the country’s GDP. Luanda draws in oil industry workers from around the world, all paying a premium for imported goods and security, and takes the top spot for the third consecutive year. “Despite being recognised as a relatively inexpensive city, the cost of imported goods and safe living conditions in this country are available at a steep price,” Mercer says.
Financial centres dominate the rest of the top five, with Hong Kong at No 2, Zurich at No 3, Singapore at No 4 and Geneva at No 5, according to Mercer, which measures the cost of more than 200 items – including housing, transportation, food, clothing, household goods and entertainment – in each location, and benchmarks them against New York.
Consultancy ECA International puts a different African city at the top of its cost of living table, ranking Juba in South Sudan No 1 – followed by Luanda. Third place goes to Zurich in Switzerland.
“The difficulty of importing international standard goods to a country which has seen significant fighting over the last year pushes up the price of the goods available for the expatriates in the country,” says Steven Kilfedder, ECA’s manager of Cost of Living and Remuneration Services. South Sudan has abundant oil reserves but little infrastructure, and poverty is rife after decades of civil war with Sudan.
Juba’s rise up the rankings is mainly down to exchange-rate fluctuations, with the South Sudanese pound closely following the US dollar and thus strengthening while Angola’s kwanza weakened, Kilfedder says.
The Economist Intelligence Unit’s (EIU) latest cost of living survey puts a more obvious candidate – South East Asia’s financial and hi-tech hub, Singapore – at the top of the list. While Singapore is only 11% more expensive than New York for basic groceries, it is found to be the joint most expensive place in the world – alongside Seoul – to buy clothes. Transport costs are also high.
However, next year’s EIU ranking is likely to show Swiss banking centres Zurich and Geneva (currently fourth and seventh respectively) moving up the leader board because of the unpegging of the Swiss franc from the euro in early 2015, says the EIU’s Jon Copestake, editor of the survey.
“There’s going to be a lot of exchange rate fluctuations influencing the next ranking. The strength of the US dollar is going to push a lot of US cities up the ranking – we could be seeing cities like New York going into the top 10, which hasn’t happened for a long time.”
The EIU checks the prices of a basket of 160 items – ranging from a loaf of bread to a luxury car, but excluding property – to compile its survey, and also uses New York as a benchmark.
Despite the weakening euro, Paris remained in second place this year: “Paris is just structurally very expensive,” says Copestake. Forty-seven million visitors flocked to see the Louvre, the Eiffel Tower and the City of Light’s other famous sights in 2013, making it the most visited city in the world.
“There’s a trend globally for outbound tourism from countries like China, which is driving the purchase of luxury goods,” Copestake says. “Paris doesn’t appear to have gone down the same discounting route as other markets where retailers are struggling. Despite domestic economic problems, the retail sector has held up well there.”
London, currently ranked No 11 by the EIU, is also expected to move up next year. “London was always traditionally seen as very expensive – but it has stayed still while others have caught up,” says Copestake. “We’ve had very flat inflation over the past few years, and before that we had very weak consumer demand, which forced down prices. There is a strong discount proposition – the Aldi/Lidl effect has been driving down prices and consumers are becoming much more savvy about how they shop.”
When it comes to housing, tiny Monte Carlo comes out on top – with estate agent Knight Frank’s latest Wealth Report showing the most expensive place in the world to buy property is Monaco. The principality attracts the super-rich with its casino, grand prix and yacht-filled harbour, and many of the 30,000-odd residents are drawn by its low taxes. Here, $1 million will buy just 17 square metres. Hong Kong and London are close behind at 20 sq m and 21 sq m, while in New York the same sum will get you 34 sq m, in Paris 50 sq m, and Dubai a positively generous 145 sq m.
Follow Guardian Cities on Twitter and Facebook and join the discussion
