Big Ben flicks Hong Kong off the top spot in costliest cities for expats

Five-year peat gets smashed.

London has become the world’s most expensive city for companies to locate employees, overtaking Hong Kong, which had previously topped the ranking for an unbroken five year period.

According to a release from Savills that based on its latest analysis, New York and Paris, meanwhile, complete the pack of four leading cities, where the combined costs of renting residential and office space top US$100,000 per employee per year.

These four cities have dominated the Savills Live/Work Index top 12 world cities since its launch in 2008, reflecting the relative stability of both the residential and commercial markets of more mature global cities post downturn compared to the more recently emerged new world cities, Savills says in a new report, 12 Cities, published today.

The release also noted that Hong Kong remains the only ‘New World’ city, from a recently-emerged or emerging national economy, to feature in the top five cities.

Its position relative to the emerging markets of mainland China means that it is unlikely to lose this status in the foreseeable future, despite property market cooling measures.

The city remains by far the most expensive city in which to buy residential property, with prices 40 per cent higher than London - but the gap is narrowing.

Here’s more from Savills:

The index measures the total costs per employee* of renting living and working space on a US dollar basis in 12 world cities.

Fluctuations in total live/work costs reflect not only the strength of a city’s residential and office markets and occupier taxes and costs, measured at a local level, but also the impact of fluctuating exchange rates on the cost of doing business on a world stage.

It is this that has contributed in large part to London’s recent ascendency in the rankings. A combination of falling residential rents and, most importantly, a weakening currency, has boosted Hong Kong’s competitiveness, with total real estate costs down -5.6 per cent in the first six months of this year, an annualised rate of -11.2 per cent in dollar terms.

The Savills Live/Work Index shows that the current average price of renting residential and office space in Hong Kong is back to 2008 levels, at US$116,000 per employee per year.

By contrast, London real estate costs grew in US dollar terms by an annualised rate of10.6 per cent in the first six months of the year so London has now become the most expensive world city in which to accommodate staff, at US$121,000 per year.

This was largely due to the UK pound’s recent appreciation against the US dollar. Overall, the US dollar cost of residential and commercial accommodation in London has increased by 39 per cent since 2008.

Despite its climb in the rankings – from 5th to 1st place since 2008 - London is still a way off the live/work accommodation costs record, set by Hong Kong in 2011 at US$128,000 a year.