Revealed: The world's cheapest & most expensive cities for expats to live in 2021

Ashgabat in Turkmenistan, Hong Kong and Beirut are the three priciest cities on the planet for expatriates to live and work in 2021, according to the annual Cost of Living survey by global consultancy Mercer.

Hong Kong slipped from the top position this past year, while Beirut jumped 42 places to become the world's third-most expensive city therefore of “a serious and extensive financial depression because of the escalation of several crises - the country’s major ever financial meltdown, Covid-19 and the Port of Beirut explosion in 2020”, Mercer said on Tuesday.

More than half of the 10 priciest cities in 2021 are situated in Asia. Tokyo and Zurich each dropped one spot to fourth and fifth, respectively, while Shanghai ranked sixth, up one place from this past year. Singapore moved from fifth destination to seventh, according to Mercer. Rounding out the most notable 10 of Mercer’s costliest cities for international employees are Geneva in eighth position, accompanied by Beijing and Bern.

The ranking of 209 cities measures the comparative cost greater than 200 items, including housing, transportation and food. This year's ranking shows how Covid-19 has shaken up the index as countries continue steadily to struggle with the economical fallout from the pandemic.

But it is very good news for expatriates in Dubai and Abu Dhabi, where the price tag on living has fallen as a result of diversification of the UAE's economy, which reduced the impact of low oil prices on gross domestic product, and subsequently deflation, Mercer said.

Dubai dropped to 42nd in the rankings, down from 23rd this past year, and Abu Dhabi fell to 56th from 39th in 2019.

The UAE economy continues to recuperate from the pandemic-driven slowdown, aided by Dh388 billion worth of monetary support measures. Government initiatives, including visas for expatriate retirees and the expansion of the 10-year golden visa scheme to inspire foreign professionals to settle in the country also have helped to improve investment sentiment.

Mercer’s survey really helps to determine the cost of expatriate packages for employees on international assignments, which rely upon factors such as currency fluctuations, cost inflation for goods and services and instability of accommodation prices.

“Cost of living is definitely one factor for international mobility planning, but the pandemic has added a whole new layer of complexity, as well as long-term implications linked to health and safety of employees, remote working and flexibility policies, among other considerations,” Ilya Bonic, career president and head of Mercer strategy, said.

The world’s cheapest city is Bishkek, the capital of Kyrgyzstan, accompanied by Lusaka in Zambia and Tbilisi, Georgia, according to Mercer’s survey.

Riyadh, Saudi Arabia, ranked as the utmost expensive city in the GCC, to arrive at 29th place weighed against 31st this past year. Manama, Bahrain, slipped to 71st from 52nd; Jeddah rose to 94th from 104th; Muscat, Oman, dropped to 108th place from 96th; Kuwait City fell to 115th from 113th; and Doha, Qatar, fell 21 places to 130th, the survey found.

The weakness of the dollar drove down costs for expatriates in the US, regardless of the rising cost of goods and services. New York ranked as the utmost expensive city in the US, followed by Los Angeles, SAN FRANCISCO BAY AREA, Honolulu and Chicago, the Mercer survey found.

Meanwhile, a strengthening euro resulted in several European cities climbing in the rankings, with Paris rising to 33rd place. The UK remained steady with London (18) and Birmingham (121) rising just one single and eight places, respectively, Mercer said.

“UK cities have remained relatively stable in the ranking this season, because of low inflation and the actual fact the pound has remained strong against all major currencies during the pandemic,” Kate Fitzpatrick, Mercer’s global mobility practice leader for the UK and Ireland, said.

In Asia, Mumbai is India’s priciest city despite dropping 18 places in this year’s index because of a relatively weak Indian rupee in comparison with other cities in the ranking, according to Mercer.

Australian cities climbed in this year’s index as the local currency rose against the US dollar. Sydney is Australia’s most expensive city for international employees after jumping 35 places to rank 31st on the index, accompanied by Melbourne, which climbed 40 places to 59th, Mercer said.