Not cheap, a Singapore stint Singapore more expensive to live in than New York; fifth most costly in Asia: Survey Christie Loh
[email protected]THE by-product of a long-running economic boom has inevitably materialised.
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For the fourth straight year, a comprehensive survey shows Singapore scaling the ladder of expensive cities, raising concerns about whether rising costs will start to put off businesses and foreign talent.
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On a global scale, the Republic has overtaken New York to become the 14th most expensive city, up from 17th last year. Asia-wide, Singapore moved up a notch to fifth place behind Osaka, Hong Kong, Tokyo and Seoul.
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Pushing the island up the rungs were housing rental hikes, higher transport costs and costlier groceries, said Mercer Human Resource Consulting, which yesterday released the annual Worldwide Cost of Living Survey of 143 cities.
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The results are of interest to multinational companies and governments, which buy the reports to determine compensation allowances for their expatriate staff.
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Already, some foreign investors here are having second thoughts.
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"We have heard of at least one case where the company plans to staff a particular Asia-wide role in Hong Kong instead of in Singapore, given the difference in costs under new rents," Mr Fermin Diez, Mercer's worldwide partner and market development director for Asia-Pacific, told Today.
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Several of his multinational corporation (MNC) clients have also started worrying about the burden on current expatriate staff here and the impact on profitability.
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As leases run out, "everyone balks at the rapid rise in rental", said Mr Diez.
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Overall private home rents surged 14.1 per cent last year from 2005, official figures showed, but landlords in prime areas have reportedly asked for as much as 50 per cent more.
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Some MNCs are now providing their expatriate employees with extra funds to cover their rental differentials, he said.
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Meanwhile, other Asian capitals may look more alluring.
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Mercer's survey shows that all cities in this region slid down the table, except Singapore and Indian cities. This trend was part of a major reshuffle in the 2007 rankings, due mainly to the weakening US dollar and the stronger Euro, explained Mercer.
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While Moscow remained the most expensive city for the second consecutive year, several European capitals — such as London, Paris, and Copenhagen — have moved closer to the top.
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Mercer compared the cost of some 200 items including transport, food, clothing and entertainment.
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Expats paid in US dollars – whose value slumped to the lowest since 1997 last year – would have less spending power in, say, Singapore, where the currency has strengthened.
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And even though cities — say in China — may be cheaper, some are often viewed by expats as "hardship postings", said Credit Suisse First Boston economist Sailesh Jha, an American citizen living here for the past five years. Pollution, for instance, is causing some expats to move out of Hong Kong.
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Since 2004, Singapore has gone from 46th place on the Mercer survey to 34th, then 17th, and this year 14th. The ascent mirrors the economy's steady recovery from the 2003 Sars crisis to the present good times of perkier wages and bigger profits.
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But although the horizon looks clear for Singapore over the next 12 to 24 months, it remains to be seen if the rosy picture would stay intact three to five years down the road.
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"For any company wishing to expand in Asia, it'll need to measure costs of relocation versus strategic value in nurturing growth of the company," said Mr Diez.
Singapore more expensive to live in than New York; fifth most costly in Asia: Survey
