Shanghai becomes most expensive city in Asia for expats

The world's most costly city for expatriates
The world's most costly city for expatriates

Chinese financial capital Shanghai is now the most expensive city for expatriates in Asia, according to a new ranking, eclipsing Seoul, which held the title last year.

The city climbed two spots from third place in December, ECA International's bi-annual Cost of Living survey showed. The survey is published in June and December.

Beijing ranked second, followed by Seoul, Hong Kong and Guangzhou in third, fourth and fifth place respectively.

"Some may be surprised to see Chinese cities feature so high up the ranking," said Lee Quane, Asia regional director at human resources consultancy ECA International.

"It is of course possible to buy many items cheaply in China. However, when comparing cost of living for the purposes of expatriate packages, as we do, we look at internationally recognized quality brands wherever possible in order to make like-for-like comparisons," Quane said.

Kok Kai Ng | Moment | Getty Images

Over the past few years, the cost of these goods has increased, he explained. This is on top of a stronger renminbi, which has also put upward pressure on costs for many companies sending staff into China.

ECA's calculations of living costs are based on a basket of daily goods, such as food, household goods, leisure services, clothing, restaurant prices as well alcohol and tobacco. The calculations are done in U.S. dollar terms. Rent, utilities, car purchases and school fees are not included as they tend to covered by separate allowances.

The remainder of the top 10 was populated by a diverse group of cities, with Busan, Tokyo, Shenzhen, Singapore and Port Moresby ranking in sixth through tenth place respectively.

Tokyo slips down the charts

Perhaps one of the most noteworthy developments has been Tokyo's slide down the ranking over the past year. The capital of Japan topped the charts a year ago, and held the second spot in December.

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"Recent economic policies including consumption tax increases have seen the price of items in ECA's shopping basket rise over the 12 months between surveys," ECA said.

"Nevertheless, the significant weakening of the yen during the same period has more than offset this, making items there cheaper now to buy for many converting from another currency," it said. The yen has depreciated 21 percent against the U.S. dollar over the past 12 months.

Australian cities have also fallen down the rankings due to depreciation in the local currency as well as a weakening economy.

Sydney, for example, is now the 30th most expensive city for expatiates in the region, down from 11th place in December.