New York: the most expensive city for expats
Is life in New York becoming ever more expensive? ECA International, experts in providing knowledge, information and technology, has published its 2023 ranking of the most expensive cities for expatriates. New York regains its top spot ahead of Hong Kong. Geneva and London retain their positions, third and fourth, respectively. The global crisis is taking its toll on economies. Like the rest of the world, New York is suffering the consequences of the war in Ukraine, the pandemic, the energy crisis and inflation. But New York's ranking is also due to a strong dollar, which remains so; a consequence of the Federal Reserve's (Fed) rising interest rates, and also a safe haven in times of crisis.
At the end of 2022, The Economist ranked New York as the most expensive city in the world. By 2021, it was ranked 6th. In New York, prices for basic foodstuffs have soared: $4.11 a kilo for sugar, $7.17 for a box of 12 eggs, $8 for a liter of oil, and $5.5 for a cup of coffee (ECA International data). On average, prices in New York are higher than in London, Hong Kong and Singapore. Other American cities are also affected by soaring prices. San Francisco falls from 11th to 7th place. Los Angeles falls from 21st to 15th place. Chicago falls from 25th to 20th place. American cities are the most expensive destinations for expatriates.
Expatriates and locals alike have to contend with soaring prices daily. And it's a surge that's widening inequalities. Foreigners with flourishing careers acknowledge that they continue to live comfortably. However, they find everything is becoming more expensive: going out, eating out, leisure activities, etc. They have to make a choice. Some avoid the most expensive neighborhoods, such as Manhattan and its overpriced housing. Others prefer to leave New York.
Hong Kong: Expensive as ever
Hong Kong is no longer at the top spot but remains as expensive as ever. Hong Kong is increasing its efforts to attract foreign talent back to the city, but the prices are still rising. According to ECA International, a kilo of sugar costs $3.73, a box of 12 eggs $9.41, a liter of oil $6.2 and a cup of coffee $5.5. Real estate is under close scrutiny. After a 15% drop in 2022, there has been a slight upturn: +1% in January, +2% in February. Beijing is pushing for an upturn in real estate transactions and improved housing affordability; for China, the housing crisis is said to be one of the main causes of the anti-government protests in 2019.
From 2019 onwards, Hong Kong will experience negative migration. Many expatriates are leaving Hong Kong for Dubai or Singapore. The situation is so tense that people talk about an "expat exodus"—those who remain lay emphasis on the pressure on housing prices. While inflation in Hong Kong has been more contained than in other countries, the cost of living remains high. The political context also continues to weigh heavily on expatriates' choices. Unthinkable for Hong Kong's pro-Chinese government, which is battling to attract back foreign investors and regain its position as an international financial center. In 2022, Singapore dethroned Hong Kong to become Asia's leading financial center.
The other most expensive cities for expatriates
Other cities, including Singapore and Dubai, are also experiencing unprecedented price hikes. Ranked 13th in 2022, Singapore leaps to 5th place in 2023 and enters the very closed circle of the 5 most expensive cities for expatriates. Dubai ranked 23rd in 2022, and moves up to 12th place this year.
The price crisis in Singapore
There has been a noticeable shift. Many former Hong Kong expatriates have taken refuge in Singapore or Dubai. Many have reopened their companies, taken over their businesses, and found new jobs, with no intention of returning to Hong Kong. The same is true of China, which is paying the price for its strict zero-Covid policy. Although this phenomenon predates Covid, it has accelerated with the pandemic. Expatriates are leaving China for Singapore, New Zealand, Japan, the United Arab Emirates, etc. Here again, the situation is being referred to as an "exodus". This may partly explain the downgrading of China's major cities, which are reputed to be expensive. Shanghai and Guangzhou, previously ranked 8th and 9th (in 2022), have plummeted to 13th and 14th place this year.
Singapore's attractivity to expatriates, which is positive for the economy, is also accompanied by unprecedented pressure on housing, particularly at the top end of the market. The state is dealing with a housing supply that is too limited for the influx of expatriates. Prices have been rising year on year and, by 2022, will have jumped by an average of 30%. These price rises are taking place against an inflationary backdrop. According to experts, rent prices will keep rising to the point of putting Singapore back on par with Hong Kong.
Is Singapore losing its attractiveness to Malaysia?
More and more expatriates are packing their bags. Prices in Singapore are becoming unaffordable, rivaling those in London. You now have to pay $1.72 for a kilo of sugar. It's $5.11 for a box of 12 eggs, $5.33 for a liter of oil and $2.54 for a cup of coffee. Expatriates are turning to cheaper Malaysia. Foreign companies are also turning to Malaysia, which offers them many benefits: low cost of living, English-speaking population, and good IT infrastructure.
Dubai: A wealthy city
The United Arab Emirates (UAE) continues to play a significant role in international migration. Despite an increasingly expensive lifestyle, one of the favorite expat destinations retains its good image. In Dubai, too, prices are soaring. In 2022, the city, which is predominantly inhabited by foreigners (90% of the population), saw rents rise by more than 50%. Here too, the cause is a supply of housing that is too low in relation to demand. While Dubai has welcomed many expatriates leaving Hong Kong, it has also welcomed many Hong Kongers and Russians. These new arrivals are in addition to the many immigrants living in Dubai.
Will Dubai, which aims to become the new international investment hub, also become the world's most expensive city? Observers believe it will be the case. Despite the authorities' efforts to make life more affordable (improved accessibility, measures to bring down rental and housing prices, etc.), the trend is still upwards. But for the time being, more and more expatriates are choosing Dubai.
