The World's Most Expensive Cities For Expats. A new study reveals the cities that cost the most for foreign-based companies and individuals

Visitors to New York may gasp that locals frequently pay $20 for a single cocktail. But the Big Apple turns out to be cheaper than 26 other world cities. If you really want to feel sticker shock, try relocating to Luanda, Angola. The oil-rich capital city is the most expensive in the world for expatriates, a study released Tuesday shows.

World centers like the second-most expensive city Tokyo, No. 5 Geneva, Switzerland, and No. 8 Hong Kong are often associated with high costs, so it might seem surprising that an African city out-priced them. But Nathalie Constantin-Métral, senior researcher at Mercer, a global research firm that advises companies on the costs of moving employees and released the report, says it's a misconception to think of Africa as cheap for newcomers.
"To entice talented staff to [African] cities, multinationals need to provide the same standard of living and benefits that these employees and their families would experience at home," said Constantin-Métral in a statement. "In some African cities, the cost of this can be extraordinarily high--particularly the cost of good, secure accommodation."

African cities costly for foreign employees

Luanda isn't the only high-priced place in Africa. Two other cities on the continent made the top 10: Ndjamena, Chad at No. 3, and Libreville, Gabon at No. 7. All three African cities are rich in natural resources, enticing oil and mining companies to do business there, but since they are also among the poorest places on earth, multinational companies often must build infrastructure from scratch, resulting in a high cost to expatriates.
To find the world's most expensive cities for expatriates, Mercer studied 214 urban centers where international firms do business, comparing the costs of over 200 items. Their calculations also included typical housing costs, one of the chief considerations for expatriates abroad. Their cost comparisons were made in March 2010, using exchange rates from that period. Prices were then converted to the U.S. dollar for comparison.

Costs drop in American cities thanks to a battered buck

Shifts in currency values shook up the rankings this year. The U.S. dollar weakened between early 2009 and early 2010, making American cities cheaper for foreigners. New York City was the world's eighth-most expensive last year, but only ranked 27th on this year's list. Similarly, Los Angeles, Calif., fell from 23rd to 55th place, and Washington, D.C., fell 45 places to No. 111. The Brazilian real strengthened against the dollar, making Sao Paolo the most expensive city in the Americas, at No. 21.

European cities took four spots at the top of the list, the most expensive being Moscow, Russia (No. 4), followed by Swiss cities Geneva (No. 5) and Zurich, (tied for No. 8). Copenhagen, Denmark, made the No. 10 spot.

In Asia the most expensive cities are in Japan: Tokyo scores second for costs and Osaka has the No. 6 spot. Hong Kong ties Zurich for the No. 8 spot.

"In Japan a lot of goods are brought in from other countries," says Rebecca Powers, a consultant at Mercer. "We look at what they will cost to the consumer after taxes."
In the Asian and European cities in the top 10, the price expatriates pay to live there is far closer to what it is for natives than it is in the most expensive African cities.

"We're looking at this bifurcation of economies in Luanda," says Powers, who adds that the city typically scores low on quality of life measures. "Sometimes there can be an assumption that when a place is expensive, it's also pleasant. This flies in the face of that."

Source: www.forbes.com