Moving abroad can open your eyes to new cultures, lifestyles and opportunities. But what are the practicalities of living in a foreign metropolis? And where is the best place to settle?
Canadians looking for high-end foreign destinations – as well as international bargains – can learn a lot from the Worldwide Cost of Living Survey, issued by the Economist Intelligence Unit. The report, published annually for the past 30 years, compares the prices of more than 150 items in 133 cities around the world. This year, Singapore ranks No. 1 in cost of living, and Damascus and Caracas are among the cheapest.
The 2018 rankings are instructive for anyone considering living overseas. The costs of Western-style goods and new infrastructure, as well as the imposition of value-added taxes, can raise prices in a city, says Roxana Slavcheva, editor of the report and the head of city practices for the Economist Intelligence Unit. Meanwhile, local economic and political disruptions and currency fluctuations can bring volatility, yet greater affordability.
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As one point of comparison, Canada’s major cities rank comfortably in the middle of the Economist list of 133 cities, with Vancouver in 41st place, Montreal at 59th and Toronto at 86th.
A sampling of cities at both ends of the spectrum is a good guide for Canadian expats and wealthy wanderers.
A selection of most expensive cities
Singapore (No. 1): Singapore remains the most expensive city in the world for the fifth year running. It’s the most expensive place to buy and run a car, with a complex registration system for vehicle owners, and is the third-priciest destination in which to buy clothes. But this city offers relative value in categories such as personal care, household goods and domestic help, says Ms. Slavcheva.
Jeff Foo, owner of Jeff Realty in Singapore, says the city’s high cost of living is driven by its limited supply of land and growing population. Gas and electricity are relatively expensive, and nearly all foods are imported, although there is much variety in cuisine. Transportation infrastructure is first-class and English is the first language, so communication is not an issue, while enhanced security and transparent tax regimes bring many expats to choose Singapore as a base.
Paris (No. 2): The only euro-zone city in the top 10 (where it has remained for the past 15 years), Paris rose from seventh position last year to second. An uptick in Europe’s economy in 2017 and the rallying euro have increased the relative cost of living in all euro-zone cities, Ms. Slavcheva notes. Paris is often interchangeable with London on the list, but Brexit woes have slowed Britain’s fortunes recently (London ranks 30th) and Paris finds itself slightly more expensive this year, she says.
The city "has a beautiful quality of life, an outstanding public-school system and a very rich cultural and social life,” says Leo Attias, president for France of the International Real Estate Federation and president of Castel Immobilier France, an asset and property management firm in Paris. Property holds its worth and can grow significantly in value, he says.
Paris ranks in the Top 10 for a majority of the bigger expenditures included in the survey, among them food, household supplies, personal care, utilities, clothing, domestic help and recreation. Only alcohol, transport and tobacco offer value for money compared with other European locales.
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Seoul (No. 6): This is among the most expensive places in the world to buy household staples. A grocery basket is almost 50 per cent more expensive in Seoul than in New York. Western goods, especially, are costly; bread can easily reach $19 or more a loaf, says Ms. Slavcheva, who spent time recently in the South Korean capital. At the same time, residents can eat more reasonably by choosing local staples such as rice and noodles, which are more readily available and affordable than Western items.
Tel Aviv (No. 9): This city, which ranked 34th just five years ago, has risen remarkably. Currency appreciation has played a part, but high costs, such as those of buying, insuring and maintaining a car, have pushed transport costs 79 per cent above those in New York, for example. Tel Aviv is also the second-most-expensive city in the survey in which to buy alcohol.
Tel Aviv is the “heart of Israel, its cultural, business and social centre,” says Inna Fleshler, marketing director at Israel Sotheby’s International Realty. It is famous for its eclectic mix of museums, gourmet restaurants, trendy cafes, nightlife, local markets, historical buildings and sights. “And most importantly it’s a sunny beach city, and in some way, you always feel on vacation here.” The city’s coastline is only five kilometres long, however, and no more lots are available for new construction, she notes, which puts it among the most expensive locations in the city. Foreigners who are not citizens of Israel and are not considered repatriants, or Jews returning to the country, face a relatively high property purchase tax of 8 per cent.
Sydney (No. 10): Australia’s exchange-rate volatility has seen its urban centres move up and down in the rankings. This year, a stronger Australian dollar has pushed Brisbane (26th) and Adelaide (30th) up five places in the Economist list, while Sydney moved up four places to 10th.
Sydney’s median house price is $845,000, with Melbourne’s median at about $700,000, says Chris McGregor, managing director of First National Real Estate in Australia. The best area for growth and livability is within 10 kilometres of the central business district, he says, with good access to transport and other amenities.
Among the least expensive cities
Sofia (No. 119): Like many cities in Central and Eastern Europe, the capital of Bulgaria offers good value for money, says Ms. Slavcheva, who is from the country. When she returns there from London to visit family, she finds that “everything is at least two and a half times cheaper.” (Indeed, the cost to have her hair cut is about 5 lev, the equivalent of $4.) The average cost of living in Eastern European cities is more than 30 per cent lower than in their Western European counterparts, she says, and no city in the region is among the Economist’s 50 costliest cities.
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Grocery prices are beginning to converge with Western Europe’s, however, despite the fact that the country has not yet joined the euro zone. Bulgaria boasts the lowest monthly minimum wage in the European Union, which drives down prices of services significantly and brings about its low position in the Economist survey.
Cairo (No. 121): Cairo, which dropped by 22 spots and narrowly avoided joining the bottom 10 cities in the report, faced a depreciation after the Egyptian central bank allowed the country’s pound to float in November of 2016. Ms. Slavcheva notes that Cairo has stabilized after the disruption of the Arab Spring events.
It is one of several Middle Eastern cities where falling exchange rates have offset high domestic inflation. While inflation in Egypt soared from an average of 13.8% in 2016 to an estimated 26.8% in 2017, the increase in prices was not enough to counteract Cairo’s fall in the Economist ranking.
New Delhi (No. 124, tie): Three Indian destinations are among the 10 cheapest cities in the survey: Bangalore (129th), Chennai (126th) and New Delhi (124th). India is tipped for rapid economic expansion, Ms. Slavcheva says, but wages and spending growth will remain low. Income inequality means that low wages are the norm, limiting household spending. This, combined with a cheap and plentiful supply of goods into cities from rural producers with short supply chains, as well as government subsidies, has kept prices down, especially by Western standards.
As the capital of the country, New Delhi has embassies and corporate headquarters. The central part of the city is costly for real estate, and dining-out prices can range from $2 to $5 a person up to $80 to $100, says Farook Mahmood, chairman and managing director of Silverline Realty, which is based in Bangalore and has offices across India. Prices generally are rising but remain reasonable, he says. “The future belongs to India," he says. "The economy is growing and industry is growing, we’re the world’s largest practising democracy, and the whole world is coming here.”
Bucharest (No. 124, tie): Good value can be found in Romania’s capital because it is “very, very cheap in terms of services,” says Ms. Slavcheva. People travel to or locate temporarily in Bucharest and other cities in the region to have dentistry and other health services performed, for example. Infrastructure in Bucharest and livability are “moving toward the Western perspective.”
Over all, the city is about 50 per cent cheaper than New York. A loaf of bread costs $2.15 and a 750-millilitre bottle of wine costs $6. One reason for moderate prices is that the city is not in the euro zone, she notes. “Once they enter it, we will see the impact.”
Almaty, Kazakhstan (No. 131): While South Asian cities traditionally are among the cheapest, they are getting competition from Almaty, Kazakhstan’s business centre. It fell in the ranking following a 50-per-cent devaluation of the national currency, the tenge, after it was allowed to float in August of 2015. Almaty is still recovering from the resulting currency crisis, but it is moving up in the Economist rankings, just above Damascus and Caracas at the bottom of the 2018 rankings, Ms. Slavcheva comments, and the currency depreciation means there are bargains to be found.
15 most expensive cities:
2. Paris and Zurich (tie)
4. Hong Kong
6. Geneva and Seoul (tie)
9. Tel Aviv
11. Tokyo and Osaka (tie)
13. New York
14. Reykjavik and Melbourne (tie)
15 least expensive cities:
127. Karachi and Algiers (tie)
124. New Delhi and Bucharest (tie)
121. Cairo, Tehran and Mumbai (tie)
119. Asuncion and Sofia (tie)