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Mumbai remains India's most expensive city for expats, Karachi in Pakistan least expensive: survey

You thought living costs in Mumbai was expensive? Think again! For a Cost of Living Survey 2015 by Mercer has ranked Mumbai at 74, a climb of 66 places, in the world's most expensive cities list. Mumbai is the country's most expensive city to live in due to its rapid economic growth, inflation on the goods and services basket and a stable currency against the US dollar, according to the survey.

 Mumbai remains Indias most expensive city for expats, Karachi in Pakistan least expensive: survey


The world’s least expensive cities for expatriates, according to the survey, are Bishkek (207), Windhoek (206), and Karachi (205).

Luanda, the capital of Angola, has been rated the world’s costliest city to live in, for the third consecutive year, followed by Hong Kong, Zurich, Singapore and Geneva as most expensive cities for expatriates. Tel Aviv (18) continues to be the most expensive city in the Middle East for expatriates. Asian cities dominate the top 10 costliest cities rankings along with major cities in Switzerland in the report.

So what makes Mumbai top all cities in India and  push other major cities in the world like Dallas (77), Munich (87), Frankfurt (98) and Vancouver (119) to reach a ranking of 74?

The survey lists the reasons for Mumbai's climb to the city having witnessed higher inflation over the last one year as compared to other metro cities, higher cost of fuel, transportation, increased prices of food items, home services and rentals impacting the cost of living.

This 'most populous' city is followed by New Delhi (132) and Chennai (157), which rose in the ranking by 25 and 28 spots, respectively. Bangalore (183) and Kolkata (193), the least expensive Indian cities, climbed in the ranking, as well.

Just as foreign exchange costs create headwinds for many multinational organizations, currency fluctuations – driven by economic and political unrest – are contributing to the cost of expatriate packages for those on the front line of globalization of their organizations. Mercer’s 21st annual Cost of Living Survey 2015 finds that factors including instability of housing markets and inflation for goods and services impacts significantly on the overall cost of doing business in a global environment.

"With a large number of Indian multinational organisations progressively expanding their footprint abroad, 85 percent of multinationals are expecting expatriate assignments to increase over the next two years to address business needs," said Ruchika Pal, India Practice Leader, Global Mobility at Mercer.

"Indian companies have been bullish on sending employees abroad and view this strategically for multiple reasons. Companies send critical and experienced talent for launching foreign investment, filling in for skill/managerial gap or for developing leaders and careers. Organisations continue to recognize the importance of international assignees. What they need to evaluate even more closely is the impact of political and economic factors such as currency stability, inflation, and political instability, to balance cost versus competitiveness of the expatriate’s compensation package," said Pal.

Many Indian companies with operations in Commonwealth of Independent States (CIS) countries remained concerned in 2014 over the devaluation of currencies in Russia, Ukraine and Kazakhstan, as it had a direct impact on the cost of living and purchasing power parity. Moscow (50) and St. Petersburg (152) dropped 41 and 117 spots, respectively, as a result of Russia’s ruble losing significant value against the US dollar, lower oil prices, and a lack of confidence in the currency following Western sanctions over the crisis in Ukraine.

Across continents, countries with the highest expected increase in the number of Indian international assignees are South Africa, UAE, UK and USA.  Despite climbing five spots, Cape Town (200) in South Africa continues to rank as the least expensive city among these four countries, owing to the South African rand being weak against the US dollar. Dubai (23) and Abu Dhabi (33), have all climbed in this year’s ranking. Many currencies in the Middle East are pegged to the US dollar, which pushed the cities up in the ranking. Steep increase for expatriate rental accommodations particularly in Abu Dhabi and Dubai also contributed to the increase of the cities in the ranking.

Keeping New York as the base city and measuring currency movements against the US dollar, all the cities are compared against it. The survey includes 207 cities across five continents and measures the comparative cost of more than 200 items in each location, including housing, transportation, food, clothing, household goods, and entertainment. Currency fluctuations and the impact of inflation on goods and services have influenced the cost of expatriate programs as well as the city rankings.

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Updated Date: Jun 18, 2015 08:01:04 IST

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