Hong Kong is once again the world's most expensive city
In 2022, Hong Kong became the world's most expensive city again, as it did in 2020, just ahead of Ashgabat, Turkmenistan, which stole that spot in 2021. That particular year was marked by various Covid-related policies. However, Hong Kong's rank is quite surprising, considering the fact that it kept its border closed since the early days of the pandemic, a situation that caused an expat exodus. Expats in Hong Kong were already worried about social crises since 2019 and the progressive influence of Beijing. But inflation was around 1.3% in April and 3% in May.
The appreciation of the US dollar (USD) compared to the Hong Kong dollar (HDK) led to soaring prices in Hong Kong. In 2005, the government set a range of 7.75 to 7.85 HDK maximum for 1 USD, but it has gotten closer to the limit over the past year. The result is felt in expats' everyday life as fruit and vegetable prices keep rising (11 USD / 87 HDK). Property prices are also skyrocketing (171,500 HDK / almost 22,000 USD per m²). Meanwhile, fuel prices have reached 21 HDK, that is, $2.65 per liter.
Which cities have surprised this year?
While Switzerland is one of the world's most attractive expat destinations, its big cities are also among the most expensive. For example, Zurich, Geneva, Basel and Bern rank 2nd, 3rd, 4th and 5th, respectively, just as in 2021. Property prices are as high as 11,800 Swiss francs (CHF) per m², that is, US$12,260. Gasoline costs nearly 2 Swiss francs (1.85, or 1.92 USD) per liter. Still, the high cost of living in Switzerland must be weighed against generally high wages and better quality of life for expats, especially in terms of services, infrastructure, green spaces, etc.
The surprise comes from Tokyo, which jumped from the 9th spot in 2019 (a place it has occupied for two years) to the 2nd spot. Dubai, which ranked 21st in 2019, dropped to the 31st this year. On the other hand, Copenhagen, 20th in 2019, is close to the top 10 (11th) most expensive cities. Paris jumped from 47th to 35th place since the Covid pandemic and 2022's inflation. In Dubai, prices rose 4.6% in April, for the first time since May 2015. In France, a 5.8% rise was recorded in June. In Japan, inflation reached 1.9% year-on-year. Some companies are even reducing the content of their products (one biscuit less in a package, 900ml of drink instead of a liter, etc.) while prices keep rising. How do these changes affect expats?
Hong Kong no longer attracts expats
Global inflation raises a paradox. The hardest-hit cities are not necessarily the most expensive. In Madrid, inflation is just above 10%. However, the city ranks 90th in the Mercer report. So it's clear that inflation is not the only criterion considered. Many other factors, such as wages and purchasing power, the quality of life, respect for the environment, ecological policy, education, social progress, living environment, cleanliness, stress, taxation, public policies, geopolitical context, etc., also account for a city's attractiveness. And expats pay particular attention to all these.
Hong Kong's expat exodus is more due to the socio-political situation than the rising cost of living. Since the pro-democracy protests of 2019, and the Chinese threat, expats are less keen on staying. In fact, 2022 only boosted the trend. According to CNBC, 93,000 foreigners had already left in 2020, with nearly 25,000 during the pandemic. By April 2022, 71,000 more expats left.
Are expensive cities less appealing to expats?
Expensive cities also hold a wide range of opportunities for expats, which makes them even more attractive. Economic dynamism is what most of them are seeking today. Switzerland, for example, is recovering quickly with a 47% rise in employment in the 1st quarter of 2022 compared to 2021. Skilled labor is much needed in sectors like IT, industry, administration, engineering, health and finance. Inflation (2.9% expected over the year) dropped to 1.8% instead of the expected 2.5%.
New York, the world's 7th most expensive city, also keeps attracting foreigners, as many are still looking to live the American Dream. Despite threats such as the gun lobby and the recent downgrading of women's rights, although debated. But many expats also want to bring change. The US economy has not entered a recession but has definitely slowed down. At the same time, sectors facing labor shortages are seeking global talent, especially engineering, IT, sustainable development, industry, health, etc.
What should you consider before moving abroad?
It's quite unlikely that expats to-be would avoid Zurich because of the high cost of living. In fact, finances are far from being the only priority for most people who choose to live overseas, although purchasing power and higher wages are key motivating factors. The quality of education, infrastructure, and economic dynamism are equally important for some. Others might seek calmness and a slower pace of life in a city. Besides, it all depends on your motivations, whether you're an eco expat or you are simply looking for a change of life. This is probably why the world's most expensive cities keep attracting expats in large numbers.
