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In 10 years Asian cities pushed out European cities from the top list of the world’s most expensive cities.

In 2008 Europe held almost all the top spots for the world’s most expensive cities, ranked by the global consulting firm “Mercer”. 7 out of 10 the world’s costliest cities were in Europe with Moscow topping the list. Only three Asian cities made into the list in 2008.

The world's most expensive cities in 2008

Rank City Country 1 Moscow Russia 2 Tokyo Japan 3 London UK 4 Oslo Norway 5 Seoul South Korea 6 Hong Kong China 7 Copenhagen Denmark 8 Geneva Switzerland 9 Zurich Switzerland 10 Milan Italy

Source: "Cost of living ranking 2008" by consulting firm Mercer

A decade later, the list of world’s most expensive cities looks completely different. In 2018 Hong Kong claimed the top spot as the world’s costliest city for expatriates, revealed annual “Cost of living ranking” published by Mercer. Asian cities pushed out European cities from the top positions as 6 out of 10 world’s most expensive cities are now in Asia.

The world's most expensive cities in 2018 Rank City Country 1 Hong Kong China 2 Zurich Switzerland 3 Tokyo Japan 4 Singapore Singapore 5 Shanghai China 6 Seoul South Korea 7 Ndjamena Chad 8 Luanda Angola 9 Bern Switzerland 10 Beijing China Source: "Cost of living ranking" by consulting firm Mercer

Only 2 European cities remained in the list, both of them in Switzerland: Zurich and Bern. Neither Moscow, once the costliest city in the world, nor London or Oslo – number 3 and number 4 respectively in 2008 – made it into the list in 2018.

Moscow was ranked 17th, while, London came in 19th. However, according to the Mercer’s report, Moscow and London still remain among the costliest cities when it comes to some consumer’s goods and services. The first-seat ticket in a cinema to watch an international release movie in London will cost more than $20, which is more than in any other city worldwide, while a pair of blue jeans is the most expensive in Moscow.

Why is Hong Kong getting so expensive?

Fast economic and technological development has accelerated the growth of the cost of living in the biggest Asian hubs. While the food in Asian cities remains relatively cheap, it is mainly because of the soaring accommodation prices that Asian cities claimed the top spots in the ranking.

Hong Kong that was placed 6th in the world’s most expensive city ranking 10 years ago, topped the list in 2018 as it is struggling to provide an accommodation for its residents. A limited housing supply and a big demand have been driving up the property prices for more than a decade. According to a report of a global real estate services firm JLL, while wages grew 45% from 2009 to 2017, rentals for mass residential properties surged 102% on the same period.

To rent a two-bedroom apartment in Hong Kong would cost $7,671 per month, while in London the price would be $4,334, in New York $5,700, in Singapore $3,334.

As the property prices have been soaring, the size of apartments has been shrinking in Hong Kong. Nearly half of all apartments built in Hong Kong in 2018 will be less than 400 square feet (37 square meters), predicts a government. According to South China Morning Post, in order to fill the demand of the affordable accommodation real estate developers came up with the idea of “nano apartments”: apartments that are less than 135 square feet (12.5 square meters).

However, even these tiny apartments do not come cheaply as demand is high. In January a small studio unit was sold for $247,435 – a surprising price for an apartment of 11 square meters.

Midland Realty study has revealed that the average cost for an apartment in Hong Kong was $2,659 per sq ft in 2018, while in 2011 it was $1,630.

What is the main reason behind the massive increase in property prices? The answer is well known – Hong Kong is short on land. However, while the government claims it is because of the city’s hilly terrain, which makes development difficult, specialists argue that the shortage is created because only 7% of Hong Kong’s land has been given for housing.

African cities joined the world’s most expensive cities club

Ten years ago Hong Kong, Tokyo, and Seoul were the only Asian cities among the top 10 the most expensive cities in the world. In 2018 three more Asian cities have entered the list: Singapore (Singapore), Shanghai (China) and Beijing (China).

“Stronger Chinese monetary regulation, a flourishing economy and a push to have the Chinese yuan as an international currency pushed Chinese cities up in the ranking,” said Yvonne Traber, Global Mobility Product Solutions Leader at Mercer.

The cost of living is rising in other parts of the world as well. Two African cities joined the world’s costliest cities club. Luanda, the capital of Angola, came in at number 6 after dropping from the first position. Ndjamena (Chad) was placed as number 8.

Mercer ranked countries based on prices of 200 items, such as housing, food, entertainment, transportation, clothing. New York City is used as the base city for all comparisons, and currency movements are measured against the US dollar.