March 3, 2022 | 3-minute read (496 words)
Although remote work is here to stay, many organizations still want a physical location that allows teams the option to meet up in person. Ideally, that location offers manageable costs, access to a talent pool and rules favorable to business growth.
The Economist Intelligence Unit’s Worldwide Cost of Living 2021 study, which analyzes data from 173 nations worldwide, homes in on an array of criteria important to businesses. Several cities on the list have long been deemed among the world’s most expensive.
But the disruption of the pandemic has landed a few unexpected cities on the list as well.
According to the EIU’s report, the list comprises the 10 cities that are the globe’s most costly to live in – and by proxy, the most expensive in which to run a business.
Top 10 global cities with the highest cost of living:
1. Tel Aviv, Israel
2. Paris (tied with Singapore for second place)
3. Singapore (tied with Paris for second place)
5. Hong Kong
6. New York City
8. Copenhagen, Denmark
9. Los Angeles
10. Osaka, Japan
Behind the rankings
The EIU measures costs for 10 categories of consumer goods and services to create its Worldwide Cost of Living index, which is benchmarked against New York City. Index scores increased by 3.8 points on average. Among the 10 categories, transportation witnessed the most dramatic rise, with the average per-liter price of gasoline up 21%.
According to the researchers, the inflation rate for prices monitored in the WCOL index across cities increased at the quickest pace in five years, rising by 3.5% year over year in local currencies.
Tel Aviv rose four places to become the world's most expensive city in 2021, owing to the growing value of the shekel, coupled with considerable price spikes for around 10% of items in the city due to the pandemic, the report’s authors write.
Due to ongoing political and economic issues, Tripoli, Libya, and Damascus, Syria, were identified as the world’s least expensive cities. Tehran, Iran, jumped to position 29 in 2021 from 79 in 2020 due to rising import prices and persistent commodities shortages due to reimposed US sanctions, the report authors write.
As a result of the federal government's COVID-19 assistance, most cities in the United States either kept the same or decreased in the rankings. This ensured that the dollar remained constant and unaffected by currency fluctuations. On the other hand, New York City turned out to be the world's sixth most-expensive city and the most expensive city in the United States.
Living prices in most large cities should normalize around the end of 2022, according to the researchers, assuming supply chain bottlenecks alleviate as expected. Nonetheless, many firms will be continuing to seek out expensive locations where talent and economic activity beckon. This could fuel the trend of firms locating their headquarters in their home nation and outsourcing certain activities.