Tokyo back as most expensive city for expats

Tokyo is again the world’s most expensive location for expatriates, rising by 11 places over the past year to top the global rankings for the first time since 2012, according to results of the Cost of Living survey published by ECA International.

To ensure that an employee’s spending power is maintained when they are sent on international assignment, a cost of living allowance is often provided as part of the pay package. This allowance will be affected by differences in inflation levels as well as exchange rate movements between the employee’s home and host countries.

The survey compares a basket of like-for-like consumer goods and services commonly purchased by assignees in over 450 locations worldwide. Certain living costs, such as accommodation rental, utilities, car purchases and school fees are usually covered by separate allowances. Data for these costs are collected separately and are not included in ECA’s cost of living basket.

“For companies bringing talent into Japan the cost of an assignment will increase as higher allowances are required to maintain employees’ purchasing power,” said Lee Quane, regional director of Asia at ECA International.

“On the other hand, companies sending employees out of Japan can pay lower cost of living allowances and still provide sufficient remuneration to maintain their standard of living,” said Quane.

All four of the ranked locations in Japan rose in the regional and global rankings. Within Japan, Tokyo (1st globally) is just ahead of Yokohama (5th), Nagoya (7th) and Osaka (9th).

Also, Hong Kong is now the 11th most expensive location in the world for expatriates, falling from 9th place last year. Over the past five years, Hong Kong has generally risen in the ECA global rankings from 60th in 2011, up 49 places to 11th in 2016.

Shanghai, which was ranked as the most expensive location for expatriates in Asia Pacific a year ago, has moved down six places to 7th. Within China, Shanghai (13th globally) is just ahead of Beijing (15th), Guangzhou (25th) and Shenzhen (32nd).

Further, 13 out of the 14 ranked Chinese cities sit in the global top 50 most expensive locations for expatriates, with only Xiamen ranking just outside at 51st.