By becoming the world’s most expensive city for foreign staff to live in, Tokyo has joins the list of the world’s most expensive cities for expat staff according to research, overtaking the Angolan capital Luanda.
The yen’s rise against the dollar pushed up the cost of living for staff and firms paid in other currencies.
The research, carried out by the consultancy Mercer, showed that Paris, Rome and Amsterdam had all slid down the rankings as a weaker euro reduced costs for overseas firms. London ranked 25, down seven places.
Eurozone costs fall
Accommodation remains the biggest cost for overseas staff, accounting for 25% of spending, according to the Mercer research, which looked at the cost of living in 214 cities. That is followed by transport and utility bills.
Falling incomes and rising unemployment due to recession in most eurozone countries have depressed prices.
In Paris, the rent on an unfurnished, two-bedroom luxury property fell 3% to $3,041 (£1,964), according to Mercer. Rental costs in Rome, Berlin and Madrid were also down.
But, perhaps the biggest impact on prices has been the exchange rate. The euro has fallen 16% since its peak in May. That translates into a 16% discount for staff and companies operating in the eurozone.
Rising Asian costs
In comparison, the relative boom in many Asia-Pacific economies has pushed up bills for expats based in the region.
In Shanghai, spending on accommodation has risen 73%. Rents in the world’s most expensive property market, Hong Kong, rose 23% to $7,039 for a two-bedroom apartment. Rents in Beijing were up 15%.
Mercer based its findings on prices gathered between March 2011 and March 2012.
During that time, strong swings on the currency markets have been bad news for overseas companies operating in Asia, especially those who receive most of their income in euros.
European firms would have faced rises of up to 15% in Australia and 8% in Japan purely on the basis of exchange rate movements.