Tokyo is the most expensive city for expatriates- Mercer Survey Reuters

Tokyo is the most expensive city for expatriates in terms of cost of living surpassing the Angolan capital Luanda, according to the Worldwide Cost of Living Survey 2012 by Mercer.

Osaka ranks third, three places up from the 2011 position. Moscow and Geneva remain in the fourth and fifth positions.

Out of the 214 cities covered in the Mercer survey, Karachi is the least expensive city for expats, less than a third as costly as Tokyo.

"Recent world events, including economic and political upheavals, have affected the rankings for many regions through currency fluctuations, inflation, and volatility in accommodation prices," said Mercer in a statement.

The rankings were done taking into consideration the comparative cost of over 200 items in each location such as housing, transport, food, clothing, household goods and entertainment.

The Mercer survey used New York as the benchmark city for the comparison and the US dollar as the currency comparison.

Here are the top five global cities in the Mercer cost of living survey 2012:

  1. Tokyo, Japan
  2. Luanda, Angola
  3. Osaka, Japan
  4. Moscow, Russia
  5. Geneva, Switzerland

Europe Becomes Cheaper

Majority of the European cities declined in terms of cost of living with some exceptions when compared to the benchmark city, New York.

Moscow at number four is the most expensive city for the expatriates in Europe.

"With a few exceptions, the remaining European cities have all dropped in the rankings, mainly due to a considerable weakening of local currencies, including the euro, against the US dollar," said Mercer.

"This is mainly due to the unstable economic situation across Europe, which has led to the depreciation of most local currencies against the US dollar. Countries badly hit by the eurozone crisis, including Greece, Italy and Spain, have also experienced drops in rental accommodation prices," it added.

Geneva remains at fifth, while Zurich moves up one place at sixth and the Swiss capital Bern at the 14th position.

Oslo is down three places to 18 from 15 and London ranks seven places down to 25th from its 2011 ranking of 18; Paris is down 10 places at 35th position.

In the UK, Birmingham is up 17 places at 133 and has overtaken Aberdeen (144) and Glasgow (161). Belfast (165) is the UK's least expensive city, up 13 places in the ranking since 2011.

"Birmingham and Belfast bucked the trend, moving up in the ranking mainly because rental costs for expatriates increased a fair bit and price increases in these cities were higher than in, say, London and Glasgow," said Nathalie Constantin-Métral, Principal at Mercer, in a statement.

Milan, Rome, Stockholm, Vienna, Amsterdam, Brussels and Dublin are the other European cities which fell in their rankings.

Middle East

In the Middle East, Tel Aviv remains the most expensive city despite dropping seven places from the 2011 position and is at the 35th position.

Lebanese capital Beirut moves up eight places in the 2012 list and has overtaken Abu Dhabi which dropped nine places from its previous position to 76th position.

"On the whole, most Middle Eastern cities have dropped in the ranking, mainly because price increases on goods and services have been more moderate here than in our benchmark city, New York. Slight decreases in expatriate accommodation costs were also observed in Abu Dhabi and Dubai," said the Mercer statement.

Jeddah in Saudi Arabia is the least expensive city in the Middle East.

Asia Pacific

According to the survey, some cities in the Asia Pacific region became more expensive to the expatriates.

"In Asia, more than six in ten cities moved up in the rankings, including all surveyed cities in Australia, China, Japan and New Zealand. Cities in Australia and New Zealand witnessed some of the biggest jumps, as their currencies strengthened significantly against the US dollar," said the Mercer survey.

Tokyo is the most expensive city in the Asia pacific region which is also the number one in the global ranking, followed by Osaka (Japan) at 3rd, Singapore at 6th, Hong Kong at 9th and Nagoya (Japan) at 10.

Shanghai, Beijing, Seoul and Shenzhen are the other most expensive cities among the top 30 rankings in the survey.

US Cities

US cities became more or less expensive in the past one year as a result of the dollar appreciation against major currencies, said Mercer.

New York, the base city for the ranking is the most expensive city at North America at 33rd position in the world ranking. It is followed by Los Angeles at number 68 and San Francisco at 90th rank.

São Paulo, Brazil (12th), Rio de Janeiro, Brazil (13th), Caracas, Venezuela (29th), Brasilia, Brazil (45th) are the other expensive cities in the American region.