Highlights this year
- New York remains the most expensive cities for both ordinary residents and expatriates.
- Among cities in Asia, Hong Kong jumped two spots to top the ranking as the most expensive city for expatriates while Tel Aviv took the top spot for ordinary residents.
- Singapore’s ordinary resident has the highest purchasing power for cities in Asia.
- Out of the 15 cities analysed, New York has the highest cost for tourists in our pilot study.
The ‘Annual Indices for Expatriates and Ordinary Residents on Cost of Living, Wage and Purchasing Power for the World’s Major Cities’ is one of Asia Competitiveness Institute (ACI)’s flagship projects. The first edition of the book was published in 2014 and provided annual indices and rankings since 2005. The study aims to provide a reliable estimate of the cost of living for the world’s major cities for ordinary residents, multinational executives, potential investors, policymakers and government officials.
Expatriates and Ordinary Residents
In contrast to other cost of living studies and publications that focus solely on the study of expatriates, ACI’s study provides separate annual indices and rankings for expatriates and ordinary residents. The study on ordinary residents is the first comprehensive study of its kind available today. In this edition, New York, Zurich, Los Angeles, Hong Kong, and Geneva are the top five costliest cities for expatriates. Whereas for ordinary residents, the top five cities are New York, Zurich, Reykjavik, Oslo, and Los Angeles.
Our indices and rankings reflect salient differences in costs of living for expatriates and ordinary residents, which arise from variations in their lifestyles and consumption preferences. This is of critical significance as the discrepancies between expatriates and ordinary residents are glaring, especially amongst Asian cities where the cost of living for expatriates is usually inflated as compared to ordinary residents.
One notable example of such discrepancy is Singapore, which according to our latest study, is ranked sixth for its cost of living for expatriates but came in 57th for ordinary residents. Such discrepancy could be attributed to the varying consumption preferences and government policies. For example, in Singapore, public housing policies are targeted to help keep the public property affordable for its citizens.
Wages and Purchasing Power
To paint a clearer picture of affordability, the book also provides indices and rankings for the wage and purchasing power of ordinary residents. In this edition, the top five cities with the highest purchasing power are Copenhagen, Geneva, Lyon, Zurich, and Vienna.
Ordinary residents that live in a country with a high cost of living may still be able to afford more goods and services as compared to ordinary residents who live in a country with a low cost of living because of their relatively higher wages. One such example is Zurich where despite its high cost of living for ordinary residents, coming in second, it still has the fourth-highest purchasing power for its ordinary residents. The study on purchasing power, therefore, provides an alternative measure and allows for a more comprehensive analysis.
Pilot Study on Tourism Price Competitiveness
In addition, this year’s edition includes a pilot case study on tourism price competitiveness. We measure this by calculating the cost incurred by two tourists on a three full-day trip for 15 selected cities. Tourism serves as one of the main economic engines for economies around the world. The importance of the sector is exemplified by the global seizure of tourism in light of the ongoing pandemic that resulted in widespread economic recession around the world. Hence, the ability to attract tourists is vital for post-pandemic recovery. With that in mind, a detailed study of tourism price competitiveness will be extremely valuable for the stakeholders. Our pilot study will serve as a great base for future research extension.