Survey aids investment decisions

Natural disasters, political upheavals, currency fluctuations and rising consumer-goods prices have shaken up the rankings of Mercer's annual cost-of-living survey for professionals working abroad, with some surprising locations jostling to the top spots in 2011.

While Prague held on to the 47th spot it occupied last year, Luanda, Angola, in south-central Africa, became the most expensive place to live for foreign employees, followed by Tokyo; N'Djamena, Chad; Moscow; and Geneva. The bustling seaport city of Karachi, Pakistan, came in at 214, the least expensive world city of those surveyed.

Slips and rises in the rankings are not lost on major international employers, who have to consider cost of living when choosing where to invest, as well as when putting together compensation packages for the employees they plan to relocate to the foreign country.

Mercer, a human resources consulting company, conducted the survey in March, measuring comparative costs of 200 items like housing, transport, household goods and entertainment.

Nathalie Constantin-Métral, senior researcher at Mercer responsible for compiling the ranking each year, said Luanda topped the list because of the scarcity of some of these basic goods, which were quite expensive comparatively when they could be found.

"International brands in Luanda are very expensive. The price for rental accommodation up to international standards is also extremely high, as availability is very limited," she said.

All cities were compared with New York City, No. 32 this year, and all currency fluctuations were measured against the U.S. dollar, Constantin-Métral explained. Because the Czech crown has appreciated against the dollar since last year and goods are more expensive, Prague should have gone up in the rankings, she said, but because other currencies - like the Australian dollar - have strengthened against the U.S. dollar even more dramatically, Prague's position remained unchanged.

Regionally, Warsaw also dropped a few positions for the same reason, despite the fact the Polish złoty gained on the U.S. dollar, as well. The Hungarian forint remained stable against the dollar, but prices for the goods examined increased more in New York than in Budapest during the period of the survey, causing Budapest to drop in rank from 94 to 113.

Only three European cities remain in the top 10 - Moscow, Geneva and Zurich - as businesses increasingly look to Asia for investment. Living costs for expats in Europe have remained relatively stable in the past 12 months, though Constantin-Métral notes a few exceptions.

"Some reductions in accommodation costs, because of the economic downturn, have also been behind the changes in rankings for select European cities," she said. "Most notably, Athens and Barcelona."

Emily Thompson can be reached at
ethompson@praguepost.com