Hong Kong dropped to the sixth most expensive location for expatriates to live globally and remains East Asia's most expensive city, according to ECA's latest survey.
Hong Kong has dropped slightly (from fourth) after falling behind the Swiss cities of Basel and Bern and now sits outside of the top 5 most expensive locations.
“Despite political and social unrest over the course of 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” said Lee Quane, regional director, Asia at ECA International.
“Although it has been overtaken by Bern and Basel, 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”.
The inflation in Hong Kong has been higher than the regional inflation. Conversely, the Hong Kong dollar remains strong compared with the Japanese yen or the euro. Inflation and currency play key roles in determining the city's place in this ranking.
Commenting on whether recruiters in Hong Kong are still actively hiring expatriates over locals, Quane told Human Resources: "I think companies always seek local talents over overseas workers for various reasons, and we haven't seen an acceleration of hiring expatriates over locals."
With the recent implementation of National Security Law, Quane said it does not necessarily mean less expats will be coming to the city.
"Take mainland China as an example, companies are still sending people to China, in spite of China's political system," he said.
Chinese cities all dropped in the most recent cost-of-living rankings this year, including Beijing and Shanghai, which both fell nine places to which fell to 24th and 19th places respectively.
“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, but 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,” Quane said.
The cost of living in South Korea has also been hit by Covid-19, with Seoul falling from 8th place to 17th in the global rankings, and Busan dropping out of the top 20 entirely.
“The change in 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,” he said.
Singapore however has remained steady in the rankings, down just two places to 14th in the rankings.
“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,” Quane said.
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.
The vast majority of US cities saw rises in the rankings as the US dollar continued to perform well against other major currencies.
“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, and as a result the US dollar has strengthened – making things more expensive for expats than in the past” said Quane.
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 biggest 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 97th place.
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.