London has become the world’s most expensive city to live and work, overtaking Asian hotspot Hong Kong, according to study by real estate adviser, Savills.
The Savills index measures the total costs per employee of renting living and working space on a US dollar basis in 12 cities across the world.
“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,” says Savills.
Take a look at the top 12 most expensive cities to live and work…
London
Rank: 1
Cost per employee per year (Jun 2014): $120,568
Change Jan to June 2014: 5.3%
Change since 2008: 38.7%
2008 rank: 5
London’s real estate costs grew by an annualised rate of 10.6 per cent in the first six months of the year in US dollar terms, due to the UK pound’s recent appreciation against the US dollar, notes the Savills report.
The cost of residential and commercial accommodation in London has increased by 39 per cent since 2008.
Hong Kong
Rank: 2
Cost per employee per year (Jun 2014): $115,717
Change Jan to June 2014: -5.6%
Change since 2008: -0.4%
2008 rank: 1
Falling residential rents, 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.
New York
Rank: 3
Cost per employee per year (Jun 2014): $107,782
Change Jan to June 2014: -1.7%
Change since 2008: 18.1%
2008 rank: 4
New York has turned costlier, moving one rank ahead in the list.
“This year has seen much more modest real estate price growth in nearly all our world cities and some have shown small falls,” says Yolande Barnes, Director Savills World Research. “We expect this subdued trend to continue as investor interest and market activity shifts to second-tier cities.
Paris
Rank: 4
Cost per employee per year (Jun 2014): $105,550
Change Jan to June 2014: -0.6%
Change since 2008: 5.0%
2008 rank: 2
Paris has slipped two ranks down this year.
“This lower level of price growth means that currency fluctuations have produced some of the biggest changes in our rankings which are expressed in dollar terms. For multinationals looking at their local costs, it is this which is likely to exercise them more than property markets over the next year,” says Yolande Barnes.
Tokyo
Rank: 5
Cost per employee per year (Jun 2014): $76,211
Change Jan to June 2014: 3.6%
Change since 2008: -22.7%
2008 rank: 3
Tokyo has fallen down the rankings (from 3rd to 5th position), as rents were falling or stagnant after 2008.
It is cheaper for businesses to set up base in Tokyo than in any of top four cities.
Singapore
Rank: 6
Cost per employee per year (Jun 2014): $74,890
Change Jan to June 2014: -1.2%
Change since 2008: -1.0%
2008 rank: 6
A preferred location for businesses, Singapore continues to maintain its rank in the list.
Moscow
Rank: 7
Cost per employee per year (Jun 2014): $70,499
Change Jan to June 2014: 0.2%
Change since 2008: -5.1%
2008 rank: 7
Moscow has retained its positon with price of renting residential and office space in Hong Kong falling by 5 per cent since 2008.
Sydney
Rank: 8
Cost per employee per year (Jun 2014): $63,630
Change Jan to June 2014: 5.5%
Change since 2008: 57.7%
2008 rank: 9
Sydney has seen significant increases in live-work costs since 2008, up 58 per cent.
Dubai
Rank: 9
Cost per employee per year (Jun 2014): $52,149
Change Jan to June 2014: 25.1%
Change since 2008: -16.0%
2008 rank: 8
Shanghai
Rank: 10
Cost per employee per year (Jun 2014): $43,171
Change Jan to June 2014: -1.5%
Change since 2008: 24.6%
2008 rank: 11 
Rio de Janeiro
Rank: 11
Cost per employee per year (Jun 2014): $32,179
Change Jan to June 2014: 6.7%
Change since 2008: 85.6%
2008 rank: 12
An affordable destination Rio de Janeiro has seen significant rise in live-work costs since 2008, up 85 per cent.
Mumbai
Rank: 12
Cost per employee per year (Jun 2014): $29,742
Change Jan to June 2014: 4.9%
Change since 2008: -20.8%
2008 rank: 10
The only Indian city in the list, Mumbai retains its position as the cheapest city, at $30,000 per person per year, down 21 per cent in US dollar terms since 2008, notes the Savills reort.
