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Hong Kong economy

Hong Kong drops out of top 10 priciest cities for expatriates due to weak currency

City falls to 11th place in world rankings, being overtaken by three cities in Asia – Tokyo, Seoul and Shanghai

PUBLISHED : Tuesday, 12 June, 2018, 7:31pm
UPDATED : Wednesday, 13 June, 2018, 1:11pm

Hong Kong, the second-most expensive city in the world for expatriates last year, has fallen out of the top 10 because of the weakness of its currency, a cost of living survey has found.

The survey of 250 major world cities was conducted by ECA International in March and looked at 170 day-to-day costs including food, clothing, transport and leisure services.

“Although the price of goods has continued to rise in Hong Kong in the past 12 months, its currency has weakened,” Lee Quane, Asia regional director at human resources consultancy ECA International, said on Tuesday.

Hong Kong was leapfrogged by three cities in Asia – Tokyo, Seoul and Shanghai. Luande in Angola was knocked off the top spot by Caracas in Venezuela.

Tokyo was ranked the most expensive city in Asia and seventh in the world, while Hong Kong was the fourth in the region and 11th globally.

“The strength of the Japanese yen, [South] Korean won and Chinese yuan enabled the three cities to leapfrog Hong Kong in relative cost of living,” Quane said.

Prices rose 2 per cent in Hong Kong from March 2017 to March 2018, the survey said.

Hong Kong is again Asia’s most expensive city for business travellers

“It doesn’t mean Hong Kong’s competitiveness has been threatened,” Quane said. “The drop means it’s cheaper for companies to move somebody to Hong Kong compared with Tokyo or Seoul.”

Housing prices such as rental costs are not included in such surveys.

“It’s hard to combine housing costs to daily expenditures since expatriates who are single and those come with family have different housing needs,” Quane said.

A similar survey conducted by The Economist Intelligence Unit in March also found Hong Kong dropped two places to the fourth most expensive city in the world, dragged down by its weakening currency.

Chinese cities generally climbed higher in rankings, as the yuan rose against major currencies such as the US dollar.

The drop means it’s cheaper for companies to move somebody to Hong Kong compared with Tokyo or Seoul
Lee Quane, ECA International

Shanghai moved up three places to the 10th in the world and third in Asia, with Beijing rising seven places to the 13th globally and fifth in the region.

“Shanghai overtook Hong Kong because of the strength of the yuan. There were very minimal changes in prices,” said Quane.

Second tier cities in China saw a bigger rise as their economies grew at a faster pace, which resulted in higher inflation rates, according to the survey. Xiamen, a coastal city in the southern province of Fujian, jumped 13 places in the ranking to the 41st, the biggest rise among Chinese cities.

Elsewhere in Asia, Singapore continued its rebound, climbing four places to the 20th in the world and ninth in the region. Macau fell from 25th to 32nd globally as the city’s currency, the pataca – pegged with the Hong Kong dollar – also weakened over the past 12 months.

Malaysia’s capital Kuala Lumpur was the Asian city that gained the most, soaring by 29 places, thanks to the strengthening of the ringgit, Quane said.

European cities moved up while locations in North America fell, due to the weakness of the US dollar against the euro. Brussels rose by 51 places while Houston plunged by 46 places.

Swiss cities accounted for four places in the top 10, with Zurich, Geneva, Basel and Bern – its capital – ranked second, third, fourth and fifth-most expensive in the world.

The survey is carried out twice a year – based on prices pooled in March and September – for the past 40 years and is widely used by human resources managers to calculate compensation packages for overseas positions.