Why Asia is becoming more expensive for expats

Expat news
  • cost of living
Published on 2021-06-30 at 06:40 by Momentsing
Asia is a popular expat destination, and the increase in remote work may allow more expats to relocate to the region. While some parts of Asia are widely known for their cheap cost of living, the Mercer 2021 Cost of Living City Ranking indicates that certain cities are becoming expensive to live in. The majority of the top 10 most expensive cities in 2021 are in Asia.

Asia offers a great mix of the first world and developing world living for expats. Many factors attract expats to Asia, including career and business opportunities, vibrant cultures, cheap cost of living in some places, and easy access to other countries in the region. The cost of living, in general, is a concern for individuals and families keen to relocate, and hence future expats in Asia may wish to consider how expensive their lifestyle will be. 

Mercer released the 2021 Cost of Living City Ranking of 209 cities, aimed to help employers work out remuneration for expat employees. The ranking shows that some Asian cities are becoming the most expensive to live in. Ashgabat (Turkmenistan) topped the list as the most expensive, followed by Hong Kong, Beirut (Lebanon), and Tokyo (Japan). Shanghai (China), Singapore, and Beijing (China) ranked sixth, seventh, and ninth, respectively. These cities ranked ahead of cities generally considered expensive, such as New York City and London, which ranked 14th and 18th, respectively.   

Ashgabat pushed Hong Kong, which topped the list in 2020, to second place in 2021. The notable increase, however, was Beirut, which climbed 42 positions year on year to become the third most expensive city in 2021. The reason for Beirut's increase in rank was, according to the Mercer report, “a severe and extensive economic depression due to escalation of several crises — the country's largest financial crisis, COVID-19 and the Port of Beirut explosion in 2020”.

Despite the increasing cost of living, certain Asian cities are also considered some of the best places to live in the world. For example, the Japanese cities Osaka and Tokyo made it to the top five most liveable in The Economist Intelligence Unit's Global Liveability Index 2021.

The cheaper cities may not be cheap for all expats

Popular expat destinations that ranked lower in the Mercer 2021 Cost of Living City Ranking included Kuala Lumpur (Malaysia) at 152nd, Ho Chi Minh City (Vietnam) at 143rd, Hanoi (Vietnam) at 139th, and Phnom Penh (Cambodia) at 125th. Bishkek (Kyrgyzstan) was the cheapest, ranking 209th. 

Several cities continue to be cheap, especially for employees and entrepreneurs who earn in stronger currencies. For example, Mercer noted that Mumbai (India), ranked 78th most expensive in 2021, dropped 18 places year on year due to a weaker Indian rupee compared to other cities.  

However, expats who get local jobs and start earning local wages may not find these cities as cheap as those earning expatriate wages or earning in stronger currencies. For example, Mercer ranked Colombo (Sri Lanka), known as a cheap destination in general at 185th for international employees, within the most affordable 25 cities. But the city may not be cheap for some residents of Colombo that earn local wages. 

Mathy Nithianantham, who returned to Colombo in 2020 after living overseas for several years, stated, “The major expense in Sri Lanka comes in the form of rent, especially in the cities. Unless the expat has some steady overseas income, rent can become a burden because earning locally and paying rent is not lucrative. Buying and renting vehicles is expensive, and the public transport system does not yet facilitate comfortable mobility across the country. The food prices are, however, somewhat reasonable, especially for those earning in stronger currencies. Utility bills, if managed efficiently, can also be maintained at reasonable levels.”

Therefore, each expat must choose where is affordable based on their circumstances, such as if they will work for a foreign company earning wages higher than their local counterparts, the inflation levels, exchange rate fluctuations, personal budgets and investment plans, and lifestyle requirements. 

In the alternative, you can look beyond Asia.