2010 Quality of Living worldwide city rankings: Mercer survey

• European cities continue to dominate the top of the ranking
• Vienna remains at the top, Baghdad at the bottom
• Calgary is first in the new eco-city ranking, London ranks 63

Vienna retains the top spot as the city with the world’s best quality of living, according to the Mercer 2010 Quality of Living Survey. Zurich and Geneva follow in second and third position, respectively, while Vancouver and Auckland remain joint fourth in the rankings.

Mercer conducts the ranking to help governments and multi-national companies compensate employees fairly when placing them on international assignments. The rankings are based on a point-scoring index, which sees Vienna score 108.6 and Baghdad 14.7. Cities are ranked against New York as the base city, with an index score of 100.

Mercer’s Quality of Living index list was revised and now covers 221 cities compared to 215 last year, which means direct trend comparison will not be possible until 2011. The new selection includes prominent capital and other major cities from across the world currently available in Mercer’s database and better reflects where companies are sending their expatriate employees in the current business environment.

Slagin Parakatil, Senior Researcher at Mercer, commented: “As the world economy becomes more globalised, cities beyond the traditional financial centres are emerging as attractive places in which to expand or establish a business. Cities in many emerging markets, such as in the Middle East or Asia, have seen a significant influx of foreign companies and their expatriate employees in recent years.”

“To ensure their expatriates are compensated appropriately and an adequate hardship allowance is included in their benefits package, companies seek a clear picture of the quality of living in these cities. We have reviewed our index to reflect these developments and it now better represents the cities that most interest our clients,” Mr Parakatil said.

European cities continue to dominate amongst the top 25 cities in the index. In the UK, London ranks at 39, while Birmingham is at 55 and Glasgow at 57. Two new cities have been added for the UK, Aberdeen at 53 and Belfast at 63. In the US, the highest ranking entry is Honolulu at position 31, followed by San Francisco at position 32. Singapore (28) is the top-scoring Asian city followed by Tokyo at 40. Baghdad, ranking 221, remains at the bottom of the list.

“Quality of living standards remained relatively stable on a global level throughout 2009 and the first half of 2010, but in certain regions and countries the economic recession had a noticeable impact on the business climate,” according to Mr Parakatil.

“Despite the economic downturn and companies’ efforts to contain costs, quality of living and hardship premiums remain important means of compensating expatriates for differences in living conditions. However, companies are more inclined to review the measurement of such allowances to ensure they are cost-effective."

This year’s ranking also identifies the cities with the best eco-ranking based on water availability and drinkability, waste removal, quality of sewage systems, air pollution and traffic congestion. Calgary is at the top of this index (score 145.7), followed by Honolulu in second place (score 145.1) and Ottawa and Helsinki in joint third (score 139.9).  Wellington in New Zealand (5), Minneapolis (6), Adelaide (7) and Copenhagen fill the next four slots, while Kobe, Oslo and Stockholm share ninth place. Port-au-Prince in Haiti ranks at the bottom of this table with a score of only 27.8 (see attached table).

Mr Parakatil commented: “A high-ranking eco-city optimises its use of renewable energy sources and generates the lowest possible quantity of pollution (air, water, noise, etc). A city’s eco-status or attitude toward sustainability can have significant impact on the quality of living of its inhabitants. As a consequence these are also pertinent issues for companies that send employees and their families on long-term assignments abroad, especially considering the vast majority of expatriates are relocated to urban areas.”

“A certain standard of sustainability is essential for city living and forms a very important part of its inhabitants’ quality of living. Though a high standard of living may be taken for granted in certain cities, a lack thereof is much more noticeable and can even lead to severe hardship,” said Mr Parakatil.

Americas

Canadian cities still dominate the top of the index for this region with Vancouver (4) retaining the top spot, followed by Ottawa (14), Toronto (16) and Montreal (21). Calgary ranks 28 on the overall quality of living ranking.

Honolulu (31) is the city in the US with the highest quality of living, followed by San Francisco (32) and Boston (37). Chicago and Washington share position 45 and New York - the base city - is in position 49. Newly added cities Philadelphia and Dallas are ranked 55 and 61, respectively.

In Central and South America, Point-à-Pitre, capital of Guadeloupe and new to the index this year, ranks the highest for quality of living at 62. San Juan in Puerto Rico follows at 72 and Buenos Aires at 78. Havana (192) and Port-au-Prince (213) are the lowest-ranking cities in the region.

Mr Parakatil commented: “Quality of living remained stable in North American cities. However, in South and Central America a general decline is witnessed mostly due to political instability, economic woes and energy shortages in certain countries. High levels of crime also remain a major problem in many of the region’s cities.”

Canadian and US cities are strongly represented at the top of the eco-city ranking, both for this region and globally. Calgary grabs the top spot globally with a score of 145.7, closely followed by Honolulu (score 145.1) in second. Ottawa is in third position with a score of 139.9 and Minneapolis follows in sixth place (score 137.8). Mr Parakatil commented: “Calgary’s top ranking is down to its excellent level of service on waste removal, sewage systems, and water drinkability and availability, coupled with relatively low air pollution.”

The highest-ranking Central and South American city is again Pointe-à-Pitre (49), followed by San Juan (69) and Montevideo (70).

Europe

Europe has 16 cities amongst the world’s top 25 cities for quality of living. Vienna retains the highest ranking both for the region and globally and is again followed by Zurich (2), Geneva (3) and Düsseldorf (6). The lowest-ranking Western European cities are Leipzig (64) and Athens (75). In the UK, London is the highest-ranking city at 39, followed by newcomer to the list Aberdeen (53), Birmingham (55), Glasgow (57) and Belfast (63).

Levels of quality of living continue to improve in Eastern Europe, with most index scores increasing slightly. Prague is the highest-ranking city at 70 and its index score increased from 93.9 to 94.8 in 2010. Budapest follows in position 73 and Ljubljana in 77.

In the eco-city index, Nordic cities fare particularly well with Helsinki (3) the highest-ranked in the region, followed by Copenhagen (8) and Oslo in joint ninth place with Stockholm. “Nordic cities do particularly well because the modern parts of most of them have been designed with potential environmental impacts in mind,” said Mr Parakatil. Aberdeen (19) is the highest-ranking UK eco-city, followed by Belfast (30), Glasgow (47), London (63) and Birmingham (64).

Middle East and Africa

Dubai (75) in the United Arab Emirates and Port Louis in Mauritius (82) are the region’s cities with the best quality of living. Abu Dhabi (83), Cape Town (86) and Tunis (94) follow and are, along with Victoria in the Seychelles (95), Johannesburg (96) and Muscat in Oman (100), the region’s only other cities in the top 100. Following the revision of the index a selection of cities from this region has been added, including Doha in Qatar (110), Rabat in Morocco (112), Banjul in Gambia (164) and Abuja in Nigeria (205).

Baghdad (221) remains at the bottom of the table, though its index score has increased slightly (from 14.4 to 14.7 in 2010). A lack of security and stability continue to have a negative impact on Baghdad’s quality of living and its score remains far behind that of Bangui (27.4) in the Central African Republic which is second to last.

In the eco-city index, most of the region’s cities rank below 100. The highest-ranking cities are Cape Town (30), Victoria (38), Muscat (48), Johannesburg (54) and Abu Dhabi and Dubai (in joint 65). Antananarivo in Madagascar (217) is at the bottom of the list with an eco-city score of 39.7, while Baghdad is at 214, scoring 40.5.

Mr Parakatil commented: “The lack of adequate modern infrastructure in some of the African cities combined with relatively high air pollution explains why many of them are ranked below 100.”

Asia Pacific

Auckland (4) retains its position as the highest-ranking city for quality of living in the region. Sydney follows at 10, Wellington at 12, Melbourne at 18 and Perth at 21. At 26, Canberra is new to the index. Singapore remains the highest-ranking Asian city at 28, followed by Japanese cities Tokyo (40), Kobe and Yokohama (both at 41), Osaka (51) and Nagoya (57). The region’s lowest-ranking cities are Dhaka in Bangladesh (206) and two cities new to the list – Bishkek in Kyrgyzstan (209) and Dushanbe in Tajikistan (210).

Mr Parakatil commented: “Quality of living declined in a few countries in Asia between the start of 2009 and 2010. Increasing threats of violence and terrorism, coupled with natural disasters such as earthquakes, typhoons and cyclones have had a negative impact on the quality of living in Asian cities. This may result in higher hardship allowances for expatriates sent to these countries.”

With a score of 138.9, Wellington (5) is the highest-ranking eco-city in the region followed by Adelaide (7), Kobe (9), Perth (12) and Auckland (13). Dhaka in Bangladesh (220) ranks lowest with a score of 30.9.

Download the complete table in Adobe PDF format here.

Source: www.mercer.com

• Asian and European cities dominate the top 10
• Significant currency fluctuations and strengthening of dollar cause major reshuffle in the ranking
• London drops 13 places to rank 16, New York joins the top 10 list

Tokyo has knocked Moscow off the top spot to become the world’s most expensive city for expatriates, according to the latest Cost of Living Survey from Mercer. Osaka is in second position, up nine places since last year, whereas Moscow is now in third place. Geneva climbs four places to fourth position and Hong Kong moves up one to reach fifth. Johannesburg has replaced Asunción in Paraguay as the least expensive city in the ranking.

In Mercer’s survey, New York is used as the base city for the index and scores 100 points, all cities are compared against New York and currency movements are measured against the US dollar. Tokyo scores 143.7 points and is nearly three times as costly as Johannesburg with an index score of 49.6.

The survey covers 143 cities across six continents and measures the comparative cost of over 200 items in each location, including housing, transport, food, clothing, household goods and entertainment. It is the world’s most comprehensive cost of living surveys and is used to help multinational companies and governments determine compensation allowance for their expatriate employees.

A significant reshuffle of cities can be observed in this year’s ranking, mainly due to considerable currency fluctuations worldwide. The majority of European cities moved down in the ranking with Warsaw experiencing the most dramatic change, plummeting 78 places from 35th to 113th. London and Oslo, both previously in the top 10, have dropped 13 and 10 places respectively. The same trend can be seen in Australia, New Zealand and India. Sydney has dropped 51 places from 15th to 66th and Mumbai has slipped down to 66th from 48th place.

Cities in the US, China, Japan and the Middle East have surged in the rankings. New York is a new entry in the top 10, jumping from 22nd to 8th place, and so is Beijing, now in 9th place, up from 20th in 2008. Japan now has two cities in the top 10 and Dubai has climbed 32 places to reach 20th.
Nathalie Constantin-Métral, a senior researcher at Mercer, commented: “As a direct impact of the economic downturn over the last year we have observed significant fluctuations in most of the world’s currencies, which have had a profound impact on this year’s ranking. Many currencies, including the Euro and British pound, have weakened considerably against a strong US dollar causing a number of European cities to plummet in the rankings.”

She added: “With significant exposure to multiple economies and currencies, multinational companies continue to be greatly affected by the financial crisis. The cost of expatriate programmes is heavily influenced by currency fluctuations and inflation rates. Now that cost containment and reduction is at the top of most company agendas, keeping track of the change in factors that dictate expatriate cost of living and housing allowances is essential.

“It is important for multinational companies to continuously benchmark against their peers to ensure compensation packages are fair and in line with the rest of the market.”

Europe, Middle East and Africa

In third place and with an index score of 115.4, Moscow remains the most expensive city in Europe for expatriates. However, a dramatic depreciation of the rouble against the US dollar has led to a sharp fall in the city’s index score compared to 2008 (142.4). Accommodation costs also started to decrease at the end of last year after a sharp increase in the first part of 2008. The next European cities in the ranking are Geneva and Zurich in fourth and sixth place, up from eight and ninth respectively. Copenhagen remains in seventh, and both Milan and Paris drop one place to 11th and 13th.

European cities have experienced some of this year’s steepest falls in the ranking, with Warsaw plummeting from 35th to 113th and Glasgow (129th place) and Birmingham (125th place) in the UK falling 60 and 59 places respectively. German and Spanish cities all fell between eight and 11 places, whereas cities in Sweden, Ukraine, Czech Republic, Romania and Hungary all fell between 36 and 48 places. “As most European currencies have weakened against the dollar it has become more costly for companies based in this region to send expatriates and their families to US cities,” said Ms Constantin-Métral.

Oslo and London, both previously in the top 10, are now in 14th and 16th place respectively. “The decline of rental prices both in Oslo and London, coupled with the fall in the value of British pound and Norwegian krone against the US dollar, have caused these cities to plummet in the rankings,” said Ms Constantin-Métral.

While the vast majority of European cities have fallen in the rankings, most Middle Eastern cities have experienced a reverse trend.  Both Dubai and Abu Dhabi have risen significantly in the ranking, moving from 52nd to 20th and 65th to 26th respectively. This is mainly due to the UAE dirham being fixed to the US dollar. Tel Aviv remains the most expensive city in the Middle East, although it is the only one in the region to move down in the ranking, from 14th to 17th.

Most African cities moved up in this year’s ranking, although their index scores have decreased. Cairo jumps a substantial 44 places to 57th as the Egyptian pound fared well against the US dollar. The sharp decrease of the South African rand against the US dollar has caused Johannesburg to slip to bottom position.

The Americas

Due to the strengthening of the US dollar, all cities in the US have experienced a rise in this year’s ranking. New York remains the highest ranking city in the region and has also joined the global top 10 list this year, jumping from 22nd to eighth place. Los Angeles is up 32 places to 23rd and Washington is up 41 places to 66th.

Canadian cities have slipped down the index with its highest ranking city Toronto down 31 places to 85th. Ottawa drops 36 places to 121st and Montreal is now in 103rd place, down from 72nd in 2008. “The Canadian dollar has weakened substantially against the US dollar which means employees transferring from New York to Ottawa or Montreal now need fewer US dollars to enjoy the same purchasing power as last year,” commented Ms Constantin-Métral.

In 15th place and up 74 places from 2008, Caracas in Venezuela is the top ranking city in South America. Sao Paolo and Rio de Janeiro have experienced a reverse move, plummeting from 25th to 72nd and 31st to 73rd respectively, Similarly, Bogota has moved down from 87th to 120th place. Buenos Aires has climbed 26 to reach 112th place. “Although the Argentine peso has lost value against the US dollar, the high inflation rate observed on goods and services have caused Buenos Aires to rise in the rankings,” said Ms Constantin-Métral.

Asia

Tokyo moves up one place in the ranking to become the most expensive city for expatriates both in Asia and globally. The Japanese yen has strengthened considerably against the US dollar which also lifts Osaka into second place from 11th in 2008. Hong Kong follows in fifth place and Singapore has moved up three places to reach 10th. Most dramatically, Seoul dropped from 5th to 51st place. In 140th place, Karachi continues to be the least costly city in this region – up one place from last year.

The Indian rupee made a significant loss against the US dollar last year and all the Indian cities have moved down the ranking as a consequence. New Delhi moves from 55th to 65th place and Mumbai drops from 48th to 66th.

Chinese cities experienced the reverse effect as the Chinese renminbi performed relatively strongly compared to most other currencies. Beijing is in ninth place, having moved up 11 places to join the global top 10. Shanghai, Shenzhen and Guangzhou follow in 12th, 22nd and 23rd place respectively.

Australia and New Zealand

Cities in this region have taken a significant plunge in the rankings following a dramatic depreciation of the Australian and New Zealand dollars against the US dollar. Sydney remains the most expensive city for expatriates in this region but has dropped from 15th to 66th. Melbourne follows in 92nd, down from 36th. Auckland has moved down to 138th place from 78th and Wellington follows in 139th down from 93rd.

Individual cost of living and rental accommodation cost reports are produced for each city surveyed. For further information or to purchase copies of the city reports, visit www.mercer.com/costofliving, or call Information Product Solutions, Warsaw on +48 22 434 5383.

Source: Mercer