Expats live more expensively than everybody else. Why?

Rising inflation and unaffordable housing may be driving the world's highest costs of living for expatriates, but they also enjoy an advantage over the local population.

Melanie Stetson Freeman/The Christian Science Monitor/File
Deen Hanley, an American expatriate who handled public relations for the Omni Saigon Hotel, one of Ho Chi Minh City's best hotels. The Oregon native said some of her friends back home in the US 'still think I'm on holiday.'

An annual survey has once again determined the world’s most expensive cities for expatriates to live in, the BBC reported.

Luanda, Angola's capital, placed first, with Hong Kong and Zurich following closely behind. Of the top 10 destinations, half were cities in Asia, and another metropolis from Africa, N’Djamena, the capital of Chad, reappeared on the list.

The rankings were compiled by the consulting firm Mercer, based on two decades of research and using New York and the US dollar as its base city and currency, reports the BBC.

What appears to be most striking about the cost of living index isn't the astronomical costs of rent or upswings in currency value, though these factors weigh decisively on rankings and expat salaries.

Due to the rising value of the renminbi, for example, there are nine Chinese cities represented in the list of top 30 most expensive cities, and Hong Kong’s property market, which remains the world’s least affordable, was a primary reason for its No. 2 spot, said the report.

Once again, the high costs of living for expats highlights the disparity between foreign nationals working abroad and local residents in these cities. A number of the places listed are also home to some of the globe’s widest gaps in economic equality, such as Angola, Hong Kong, China, and Singapore.

“With 17 percent of city state’s residents worth S$1m, those who serve, drive, and treat them may as well live on another planet,” read a Guardian article on Singapore.

Not all the wealth is constrained amongst foreign nationals, of course. But more often than not, expats can afford to hire security, buy imported goods, and in some cities, even produce cleaner air for their children to play in, manifesting a bubble of luxury simply unattainable for most locals.

Last year in Beijing, for example, expat children were shielded from ascending smog levels as the private International School of Beijing – where families are charged tuition fees ranging from around $27,000 to $40,000 a year – built two domes enclosing its outdoor playgrounds. The cost? $5 million.

“Until the skies clear, life in the bubble seems surprisingly good,” wrote CNN’s Euan McKirdy.

While China’s high levels of pollution led factories to suspend production – and likely, workers’ wages – it enabled expats to demand increased living allowances and healthcare benefits. Headhunters scrambled to optimize packages in their attempts to recruit and retain talent, reported Bloomberg.

In countries like Mexico, where kidnapping is rife, security companies have indicated that expats are rarely targeted, likely because of their additional protection by international agencies. “We’re not sure totally as to why they shy away from Americans and Canadians, but we think part of the reason is because of our law enforcement communities, whether it’s the FBI or the RCMP,” Wes Odom, executive vice president of operations for the security firm the Ackerman Group, told The Northern Miner.    

This isn’t to say that the life of an expat is problem-free. As one recruiter noted, “packages are shaped around executives leaving their families in their home country and receiving an allowance for frequent home trips.” Some foreign nationals, particularly Americans, are also required to pay tax in both countries, or have had to repatriate due to the pressure of fluctuating exchange rates.

But many expats enjoy an inherent advantage, because their paychecks are adjusted based on indexes like Mercer’s, reported the Wall Street Journal. Locals, on the other hand, aren’t afforded the same luxury.

of stories this month > Get unlimited stories
You've read  of  free articles. Subscribe to continue.

Unlimited digital access $11/month.

Get unlimited Monitor journalism.