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Hong Kong is once again the world’s most expensive city for expatriates, even as the economy in the Chinese territory faces growing headwinds and companies cut back on once generous allowances.
The city replaced Luanda, capital of oil-rich Angola, where living costs fell because of the collapse of the Angolan currency on the back of the commodities price slump.
Five of the 10 most expensive cities for expats are in Asia, underlining the extent to which businesses must invest in their staff if they are to have access to the world’s economic growth engine. Outside the top 10, New York rose five places to rank 11th, while London fell five to 17th.
“Many Asian cities remain amongst the world’s most expensive places to deploy expatriates,” said Mario Ferraro of Mercer. “However, this has not hindered companies from relocating talent here, as the region continues to offer growth potential and the demand for top talent remains high.”
Singapore, which is a hub for investors looking at the relatively fast-growing Southeast Asian region, was the fourth most expensive city, ahead of Tokyo in fifth, Shanghai in seventh and Beijing in 10th place.
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But with China’s economy going through a structural slowdown and growth weak in much of the world, some multinational companies have been cutting back on benefits, including housing allowances, offered to expats.
Mr Ferraro said that while companies were “very cautious” about offering large expat packages, all of the most expensive locations were characterised by a scarcity of local talent.
Whether living in a pumped-up African oil city or an Asian financial centre, many expat workers rely on company benefits to justify moving from their home base, where costs are often much lower.
The problem is particularly acute in Hong Kong, which has some of the world’s most cramped and expensive housing.
Purchase prices have started to fall in the past year as Hong Kong feels the impact of the Chinese slowdown and a drop in mainland visitors.
But the median housing price was still 19 times the median annual pre-tax household income, as of the third quarter last year, according to a survey by Demographia, a US consultancy.
Renting a two-bedroom unfurnished apartment in a well-located part of Hong Kong costs more than $6,809 a month, said Mercer, far ahead of New York at $5,100, London at $4,583 and Singapore at $3,129.
While housing prices remain painfully high, Hong Kong is still one of the cheapest places to buy fast food.
A typical McDonald’s hamburger meal costs $4.83 in Hong Kong, against $6.43 in London and $8.74 in New York.
Mercer’s survey measures the dollar cost of a basket of goods and services typically used by expats, including accommodation, food and clothing. But it does not take account of different income-tax regimes.