Mercer’s 26th annual Cost of Living Survey finds Indian cities have risen in rankings in surveying the most and least expensive cities for expatriates globally

9 June, 2020

Mumbai

• Mumbai (60) & Delhi (101) rank among the top 25 most expensive cities in Asia for expatriates, among those surveyed. Hong Kong retained its global top spot as the most expensive city for expatriates. 
• Mumbai (60) remains the most expensive city and Kolkata (185) is least expensive city for expatriates, although all surveyed Indian cities rose up in rankings.  
• In a pandemic era, sudden changes in exchange rates due to impact on global economy and instability of accommodation prices are likely to affect costs of expatriation & purchasing power in immediate term. 

According to Mercer’s 2020 Cost of Living Survey results, Mumbai (60) remains at the top of the most expensive city in India moving up seven spots globally, ranking as the 19th most expensive city in Asia for expatriates living and working overseas. Six of the top 10 cities in this year’s ranking are in Asia, and Hong Kong (1) keeps its lead place as the most expensive city in Asia and worldwide, now for three consecutive years. 

“The COVID-19 pandemic reminds us that sending and keeping employees on international assignments is a huge responsibility and a difficult task to manage. Rather than bet on a dramatic resurgence of mobility, organizations should prepare for the redeployment of their mobile workforces, leading with empathy and understanding that not all expatriates will be ready or willing to go abroad.” , said Ilya Bonic, Career President and Head of Mercer Strategy. 

The Indian Rupee, for example, weakened significantly against the US dollar during the peak of the outbreak amid concerns of the economic downturn. The US dollar strengthened against most currencies, pushing cities in USA up in ranking, whereas despite some small price increases in Europe, several local currencies have weakened against the US dollar, pushing cities in this region down in the ranking.

“In the first phase of the COVID-19 pandemic, most companies braced for the immediate impact, putting people first to ensure safety and well-being of employees overseas through repatriation, regulatory adherence or ensuring fund exchanges remained possible. As we recover in the short-term, companies are preparing for redeployment & business continuity. The levels of atypical  volatility in currency & shortage of goods impacted by supply chain disruption may suggest inflationary impact in future, requiring balancing between cost considerations and making adjustments for purchasing power.” , said Padma Ramanathan, Global Talent Mobility Practice Leader at Mercer.  

Mercer’s 2020 Key India Findings 

Mumbai (60) occupied its position in the top spot as the most expensive in Indian cities surveyed, followed by New Delhi (101) and Chennai (143), while Bengaluru (171) and Kolkata (185) are the least expensive Indian cities in ranking.

Mumbai (60) moves up one spot to 19th position within Asian cities, from previous year.  Globally, Mumbai still ranks (with New York as a common base) higher and more expensive, surpassing cities like Amsterdam (64), Sydney (66), Frankfurt (76), Berlin (80), Toronto (98). This is significantly led by the housing rental costs being among the most expensive worldwide. In a pandemic era, where cleaning supplies (e.g.  Antiseptic spray, disinfectant, household liquid cleaning product and Soap etc.) and comfort food have become more popular in use, price of goods  in these categories are however are considerably less expensive in the city, compared to other such global commercial cities.  

Overall, each Indian city surveyed showed a jump in rankings by a minimum of four places, with New Delhi (101) having climbed the most by seventeen positions and narrowly escaping the top 100 list of most expensive cities for expatriates. In most part, relative positioning of other cities such as those in Europe being pushed down the order for currency reasons have influenced the jump in rankings across. However, there has been inflationary increase in prices of goods & services in personal care and utility categories across cities, especially for Mumbai and New Delhi. 

Chennai (143) has moved up by eleven spots in the list compared to other Indian cities, influenced by its position in the middle of the survey & inflation, but remaining an attractive expatriate destination for its relative affordability in expatriate housing and eating out. Bengaluru (171) has risen eight spots in position, displaying slight strain on costs in food & utilities. Kolkata (185) remains the least expensive especially for rental and domestic costs among the surveyed cities.

“With challenges of cost considerations and complexity of operating globally in today’s environment , reinventing talent mobility programs is imperative in the future agenda, post-crisis. This could comprise applying newer economic models, using distributed talent workforces, newer ways of working enabled by technology, leveraging access to right information for location assessments - as critical factors for right talent mobilization decisions.  For example, it is not surprising that Indian cities are emerging to be among key contenders providing a business case to relocate operations for manufacturing or services   for reasons such as skill availability, cost competitiveness and attractiveness to mobilize executives to conduct business. ”, added Ms. Padma. 

Mercer’s 2020 Cost of Living Survey (Global Rankings) 

According to Mercer’s 2020 Cost of Living Survey, Hong Kong (1) tops the list of most expensive cities for expatriates, followed by Ashgabat (2), Turkmenistan in second position. Tokyo (3) and Zurich (4) remain in third and fourth positions, respectively, whereas Singapore (5) is in fifth, down two places from last year. While the global economic downturn took hold during the first part of the year, the strength of the dollar drove up costs for expatriates in US cities. As a result, cities in the United States have climbed in this year’s ranking of most costly cities. New York City ranked sixth, moving up from ninth place. Mercer’s data was collected in March; price variances in many locations were not significant due to the pandemic . 

Other cities appearing in the top 10 of Mercer’s costliest cities for expatriates are Shanghai (7), Bern (8), Geneva (9), and Beijing (10). The world’s least expensive cities for expatriates, according to Mercer’s survey, are Tunis (209), Windhoek (208), Tashkent and Bishkek, which tied to rank 206. 

Mercer's widely recognized survey is one of the world’s most comprehensive, and is designed to help multinational companies and governments determine compensation strategies for their expatriate employees. New York City is used as the base city for all comparisons and currency movements are measured against the US dollar. The survey includes over 400 cities throughout the world; this year’s ranking includes 209 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. 

Notes for editors

The figures for Mercer’s cost of living and rental accommodation cost comparisons are derived from a survey conducted in March 2020. Exchange rates from that time and Mercer’s international basket of goods and services from its Cost of Living Survey have been used as base measurements. 

Governments and major companies use data from this survey to protect the purchasing power of their employees when transferred abroad; rental accommodation costs data is used to assess local expatriate housing allowances. The choice of cities surveyed is based on demand for data.

About Mercer

Mercer believes in building brighter futures by redefining the world of work, reshaping retirement and investment outcomes, and unlocking real health and well-being. Mercer’s more than 25,000 employees are based in 44 countries and the firm operates in over 130 countries. Mercer is a business of Marsh & McLennan (NYSE: MMC), the world’s leading professional services firm in the areas of risk, strategy and people, with 76,000 colleagues and annual revenue of $17 billion. Through its market-leading businesses including Marsh, Guy Carpenter and Oliver Wyman, Marsh & McLennan helps clients navigate an increasingly dynamic and complex environment. For more information, visit www.mercer.com. Follow Mercer on Twitter @Mercer.

Mercer produces individual cost of living and rental accommodation cost reports for each city surveyed. For more information on city rankings, visit https://bit.ly/3c9EzFN. To purchase copies of individual city reports, visit https://mobilityexchange.mercer.com/multinational-approach-cost-of-living-data.

Source: Mercer’s 2020 Cost of Living Survey