Mumbai continues to be the most expensive city for expatriates in India

Mumbai (57) is ranked higher and more expensive than cities like Auckland (61), Dallas and Paris (62), Canberra (71), Seattle (76) and Vienna (78) of the world. It has moved up 25 places from being ranked 82 in 2016

Ranked at the 57th spot, Mumbai is India’s most expensive city for expatriates, inching closer to break into the top 50 most expensive cities in the world. New Delhi, ranked 99, has moved into the top 100 category, Chennai (135), Bengaluru (166) followed by Kolkata (184), says Mercer’s 23rd annual Cost of Living Survey.

Mumbai (57) is ranked higher and more expensive than cities like Auckland (61), Dallas and Paris (62), Canberra (71), Seattle (76) and Vienna (78) of the world. It has moved up 25 places from being ranked 82 in 2016.

New Delhi and Mumbai have become more expensive, over last year, and their rankings have gone up substantially. “Residential rental prices increased in Mumbai and New Delhi. Due to demonetisation, real estate sales market has been severely hit. However, the rental market benefitted from the consumers’ sudden withdrawal from the purchase market, thereby putting pressure on rental prices” said Ruchika Pal, India Practice Leader, Global Mobility at Mercer.

Mercer’s 23rd annual Cost of Living Survey finds that factors like the instability of housing markets, inflation for goods and services and foreign exchange fluctuations contribute to the overall cost of doing business in today’s global environment.

Mumbai’s jump in ranking is also attributable to a surge in prices of food and personal care. Inflation, amongst the highest in Indian cities, moved from 4.81 percent to 5.57 percent, during this period, in Mumbai. Overall, while inflation in India has been maintained, over the last few years, prices of expat food items such as cheese, butter, fish, meat etc have increased significantly. Prices for fruits and vegetables such as onions, tomatoes, lettuce and pineapple have also a shown increase. Mumbai is also the most expensive cities in India on account of transportation, which includes taxi fares, cost of auto and auto parts as well as running costs, says the survey.

Overall, Indian cities have moved up the global ranking substantially, not just on account of internal factors, but additionally due to some cities falling in rankings, globally, on account of currency volatility especially in Egypt, Turkey and United Kingdom.

“Despite volatile global markets and growing security issues, organisations continue to leverage global expansion strategies to remain competitive and to grow. With a large number of Indian multinational organisations progressively expanding their footprint abroad, 71 percent of them are expecting expatriate assignments to increase over the next two years to address business needs as well as build careers and build leaders. Indian MNCs continue to send assignees largely from headquarters to Subsidiaries” said Ruchika Pal, India Practice Leader, Global Mobility at Mercer.

Costs of goods and services get impacted by shift in inflation or by currency volatility, both in the home and host cities, thereby directly impacting overseas assignment costs. “In balancing organisation’s appetite to globalization and increasing cost pressures, accurate and transparent expat data such as cost of living indices, can be a useful”, she added.

Mercer’s 23rd annual Cost of Living Survey finds that factors like the instability of housing markets, inflation for goods and services and foreign exchange fluctuations contribute to the overall cost of doing business in today’s global environment.

The Survey finds that Asian and European cities – particularly Hong Kong (2), Tokyo (3), Zurich (4), and Singapore (5) – top the list of most expensive cities for expatriates. The costliest city, driven by cost of goods and security, is Luanda (1), the capital of Angola. Other cities appearing in the top 10 of Mercer’s costliest cities for expatriates are Seoul (6), Geneva (7), Shanghai (8), New York City (9), and Bern (10). The world’s least expensive cities for expatriates, according to Mercer’s survey, are Tunis (209), Bishkek (208), and Skopje (206).

According to Mercer’s International Policies and Practices Report- India, 88 percent of the companies in India pay a Cost of Living allowance to their long-term assignees either as a separately identified allowance or as part of a single expatriate allowance, covering other items in addition to goods and services in the remuneration package. 75 percent of these companies determine the COL allowance using an index-based approach – usually the same index is used throughout the assignment for all typical long-term assignments.

Across continents, countries with the highest current number of India assignees are United States, United Kingdom and United Arab Emirates (UAE). Across continents, countries with the highest expected increase in the number of Indian international assignees are UAE, UK and Kenya.

Cairo, Egypt, has dropped 92 ranks, from 91 to 183 and Aberdeen, United Kingdom, has dropped 61 ranks, from 85 to 146.

Cities in the United States are the most expensive locations in the Americas, with New York City (9) ranked as the costliest city, climbing two spots from last year. San Francisco (22) and Los Angeles (24) follow, having climbed four and three spots respectively. Among other major US cities, Chicago (32) is up two places, Boston (51) is down four places, and Seattle is up seven places. Portland (115) and Winston Salem (140) remain the least expensive surveyed cities for expatriates in the US. This has a direct impact on the cost of expatriate assignments for Indian multinationals.

Ruchika Pal, India Practice Leader, Global Mobility at Mercer said, “Overall, US cities either remained stable in the ranking or have slightly increased due to the movement of the US dollar against the majority of currencies worldwide.”

Only three European cities remain in the top 10 list of most expensive cities for expatriates. Zurich (4) is still the most costly European city on the list, followed by Geneva (7) and Bern (10). Moscow (14) and St. Petersburg (36) surged fifty-three and one hundred and sixteen places from last year respectively, due to the strong appreciation of the Rouble against the US dollar and the cost of goods and services. Meanwhile, London (30), Aberdeen (146) and Birmingham (147) dropped thirteen, sixty-one and fifty-one spots respectively as a result of the pound weakening against the US dollar following the Brexit vote. Copenhagen (28) fell four places from 24 to 28. Oslo (46) is up thirteen spots from last year, while Paris fell eighteen places to rank 62.

Ranking 17, Tel Aviv jumped two spots from last year and continues to be the most expensive city in the Middle East for expatriates followed by Dubai (20), Abu Dhabi (23), and Riyadh (52), which have all climbed in this year’s ranking. Jeddah (117), Muscat (92), and Doha (81) are among the least expensive cities in the region. Cairo (183) is the least expensive city in the region plummeting ninety-two spots from last year, following a major devaluation of its local currency.

Five of the top 10 cities in this year’s ranking are in Asia. Hong Kong (2) is the most expensive city as a result of its currency pegged to the US dollar, which drove up the cost of accommodations locally. This global financial center is followed by Tokyo (3), Singapore (5), Seoul (6), and Shanghai (8). The strengthening of the Japanese yen along with the high costs of expatriate consumer goods and a dynamic housing market pushed Japanese cities up in the ranking.

Elsewhere in Asia, Bangkok (67) jumped seven places from last year. Jakarta (88) and Hanoi (100) also rose in the ranking, up five and six places, respectively. Karachi (201) and Bishkek (208) remain the region’s least expensive cities for expatriates.

admin

Related posts

Leave a Reply

Your email address will not be published. Required fields are marked *