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Happy that Chicago ranks 38th in the World!

World's priciest city? Try Moscow
Russian capital has surpassed Tokyo as No. 1, survey says, while NYC is most costly in U.S.

By Madlen Read
Associated Press
Published June 26, 2006

Moscow has eclipsed Tokyo as the world's most expensive city, a new survey says.

The Russian capital moved up three spots from a year ago because of a recent property boom, according to a survey released Monday, while the Japanese capital slipped to third place because of the weaker yen.

Seoul ranked second on the list, up from fifth last year.

The survey by Mercer Human Resource Consulting ranked 144 cities around the world, measuring the comparative cost of more than 200 items such as housing, transportation and food. The survey is aimed at helping multinational employers determine compensation for their expatriate workers.

With cities around the world increasingly expensive for expatriates--notably cities in developing countries--employers may need to re-examine compensation and benefits for their workers, said Rebecca Powers, a senior consultant at Mercer.

"As we see more and more movement into these emerging markets, a lot of those programs need to be looked at," Powers said.

Overall, foreign exchange rate fluctuations were behind the majority of the changes in ranking. But in Moscow's case, costs were buoyed by the surging price for large living accommodations. Prices for big houses rose about 50 percent over the past year, driven in large part by soaring demand from expatriates, Powers said.

"It reflects a much bigger demand for palatable housing for someone coming into Russia trying to replicate the housing they had at home," she said.

After Moscow, Europe's priciest cities were London, ranked No. 5 overall, and Geneva, ranked No. 7. European cities tended to fall in the rankings this year because of a weakening euro.

New York, ranked No. 10, up three spots from last year, remains North America's costliest city, followed by Los Angeles and San Francisco.

Chinese cities, including Hong Kong at No. 4, Beijing at No. 14 and Shanghai at No. 20, climbed the list mostly because of the yuan's strength after being depegged from the U.S. dollar.

With the Brazilian real rising about 20 percent versus the U.S. dollar over the past year, Brazilian cities Sao Paolo and Rio de Janeiro surged to No. 34 and No. 40 from No. 119 and No. 124, respectively.

"What's so interesting now is that we do see, year to year, more fluctuation in these rankings than we used to," Powers said. "The investment and flow of capital and businesses into developing countries has made them a bit more expensive."

Companies likely will have to pay expatriate employees more to retain them and may want to consider working harder to hire staff locally in the long term to help alleviate relocation costs, Powers said.

The least-expensive city surveyed was Asuncion in Paraguay.

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50 most expensive cities
The 50 priciest cities in the world, according to the cost of items including housing, transportation, food, clothing, household goods and entertainment:

1. Moscow

2. Seoul

3. Tokyo

4. Hong Kong

5. London

6. Osaka, Japan

7. Geneva

8. Copenhagen

9. Zurich

10. Oslo

10. New York

12. St. Petersburg, Russia

13. Milan, Italy

14. Beijing

15. Istanbul

15. Paris

17. Singapore

18. Dublin

19. Sydney

20. Shanghai

21. Rome

21. Kiev, Ukraine

21. Vienna

24. Tel Aviv

25. Helsinki, Finland

25. Dubai, United Arab Emirates

27. Douala, Cameroon

28. Taipei, Taiwan

29. Los Angeles

30. Abu Dhabi, United Arab Emirates

31. Lagos, Nigeria

32. Beirut

32. Hanoi

34. Sao Paolo, Brazil

34. San Francisco

36. Stockholm

37. Ho Chi Minh City, Vietnam

38. Chicago

39. Miami

40. Rio de Janeiro

41. Lusaka, Zambia

41. Amsterdam

43. White Plains, N.Y.

44. Shenzen, China

45. Abidjan, Ivory Coast

45. Dakar, Senegal

47. Toronto

48. Jakarta, Indonesia

48. Bratislava, Slovak Republic

50. Prague, Czech Republic

Source: Mercer Human Resource Consulting

Copyright © 2006, Chicago Tribune