FOR the first time in the The Economist Intelligence Unit’s Worldwide Cost of Living (WCL) survey’s history, three cities share the title of the world’s most expensive city: Singapore, Hong Kong and Paris (France).
The Top 10 is largely split between Asia and Europe, with Singapore representing the only city in the Top 10 that has maintained its ranking from the previous year.
In the rest of Asia, Osaka (Japan) and Seoul (South Korea) join Singapore and Hong Kong in the Top 10. The Japanese city has moved up six places since last year, and now shares fifth place with Geneva (Switzerland).
In Europe, the usual suspects – Geneva and Zurich (both in Switzerland), as well as Copenhagen (Denmark) – join Paris as the world’s most expensive cities to visit and live in out of the 133 cities surveyed.
Asia is home to some of the world’s most expensive cities, but also to many of the world’s cheapest cities. Within Asia, the best value for money has traditionally been offered by South Asian cities, particularly those in India and Pakistan.
To an extent this remains true, and Bangalore, Chennai, New Delhi and Karachi feature among the 10 cheapest locations surveyed. India is tipped for rapid economic expansion but, in per-head terms, wage and spending growth will remain low.
Income inequality means that low wages are the norm, limiting household spending and creating many tiers of pricing as well as strong competition from a range of retail sources. This, combined with a cheap and plentiful supply of goods into cities from rural producers with short supply chains as well as government subsidies on some products, has kept prices down, especially by Western standards.
As Damascus and Caracas show, a growing number of locations are becoming cheaper because of the impact of political or economic disruption. Although South Asia remains structurally cheap, political instability is becoming an increasingly prominent factor in lowering the relative cost of living.
This means that there is a considerable element of risk in some of the world’s cheapest cities. Karachi (Pakistan), Tashkent (Uzbekistan), Almaty (Kazakhstan) and Lagos (Nigeria) have faced well-documented economic, political, security and infrastructural challenges, and there is some correlation between The WCL ranking and its sister ranking, the Global Livability Survey. Put simply, cheaper cities also tend to be less livable.