If you’re an expat in Hong Kong, a cup of coffee costs nearly $8. An unfurnished two-bedroom apartment in an “appropriate neighbourhood” will set you back $6,800 a month. A carton of milk? $4. That’s according to global consultancy firm Mercer, which last month ranked the most expensive cities in the world for expats in its 2016 Cost of Living report. Hong Kong was top of the list, followed by Angolan capital Luanda, then Zurich in Switzerland and Singapore.
The list is compiled based on measuring the comparative cost of more than 200 items in each location. Items compared include accommodation, transport, food, clothing, household goods and leisure activities.
But do people really pay those prices, or are there ways for expats to live in places like Hong Kong or Luanda for less? What is it about the expat experience that makes these cities so expensive for foreigners to live there, but not necessarily locals?
Justin Heifetz, a 30-year-old journalist from the US who has lived in Hong Kong on and off since 2011, said he was not surprised the city had topped Mercer’s league table, because rents were “astronomical” and had risen markedly since he first arrived.
But he said “expat prices” could be avoided by living — like he did — on the Kowloon side of the city, further north and much cheaper than Hong Kong Island, which is home to the Financial District and a lot of the expat social scene. “You can go even cheaper by living in the New Territories,” he said, referring to the northern part of Hong Kong, which is geographically and culturally closer to China.
Dean Blackburn, head of HSBC Expat, an offshore banking arm of the HSBC Group catering to expatriates, agreed that rent was a major expense for expats, particularly in cities like Singapore, Hong Kong, London or New York. According to the bank’s own research, only one in three expats received an accommodation allowance from their employer.
“It is important that those who are relocating understand the range of benefits they can receive from their employer, and that they research the living costs in their host country,” he explained.
To compensate for his high rent, Heifetz said he saved money on food shopping by avoiding the high-end supermarkets used by most foreigners. Instead he stuck to local stores and ‘wet markets’, so-called because they sell fresh meat and fish and their floors are washed regularly. Street food was also good value, he said, and taxis and domestic help were likewise inexpensive.
Debt risks
But not all expats are as money-minded. Indeed, according to Keren Bobker, an independent financial advisor and long-term resident of Dubai in the United Arab Emirates, a “keeping up with the Joneses mentality” had led many expats into serious debt.
“I have come across far too many people who live beyond their means and have sadly fallen for the hype that says you need to have a big villa, a fancy car, designer clothes and go to expensive restaurants all the time,” explained Bobker, a senior partner of Holborn Assets in Dubai (a city ranked 21 in the Mercer survey and the most expensive in the Middle East).
Dubai is “marketed as a glamourous place where the main hobby is spending money”, she said, and a lot of people assume that’s the way to live and so spend what they cannot really afford.
Moving overseas with a family can also ramp up costs due to additional spending on school fees, health care and regular trips back home.
In the UAE, for example, where expats are not eligible for free education, a child is expected to start school aged three with international, British, or American institutions charging as much US$10,000 a year for kindergarten, and costs can double for secondary school. Fees increase the older the child is and generally don’t include incidentals such as uniforms, textbooks, sports equipment and compulsory school trips to places like Thailand.
Expats in UAE — and many other places — must also pay for private healthcare and insurance packages do not come cheap. The more children you have, the more you will be paying out. Moreover, being away from friends and family means free and flexible childcare is not an option.
Some companies, but not all, will provide a ‘travel allowance’ to go back home, but this is unlikely to cover all your flights, connections and luggage fees. Then, there is the convenience (and cost) of keeping a home country mobile phone contract going as well as one in your new location and the feeling you must always return home bearing gifts.
According to Bobker, companies in Dubai (many of which are feeling the effects of lower oil prices) have been scaling back expatriate benefits such as assistance with education costs. This, coupled with rising school fees and rents, is starting to price some people out of the city.
Lifestyle choices
Tessa Fairclough moved to Singapore — ranked the fourth most expensive city for expats by Mercer — two years ago with her husband, who works in the oil industry, and their two young daughters, who are aged five and three.
The British family’s craziest single expenditure to date she said had been a four-year-old Peugeot, which set them back SGD70,000 ($51,860) because cars are “extortionately expensive”.
Fairclough moved to Singapore via a previous expat posting in Houston, Texas. She said, like Heifetz, that shopping in local stores and wet markets was cheaper than using ‘expat supermarkets’ and food from street vendors was excellent value compared to meals served in high-end restaurants.
“If you concentrate on living more ‘locally’ then I’m sure you could live here cheaply,” she said. “However, it is such a sociable place and you would have to say no to so many invitations that it may result in a rather lonely expat experience.”
The mum-of-two acknowledged she’d fallen into expat habits. “When you live in the bubble of Singapore expat life, it is very easy to want to experience every facet of living a tropical lifestyle in a cosmopolitan city,” she said.
“Top that off with a live-in helper who can babysit at a moment’s notice and there is rarely a need to say no to an invitation.”
Choices
Matthew Miller, a stocks trader turned headhunter who now runs his own boutique recruitment firm, Homewood Group, moved to Hong Kong from London in 1997 and then to Tokyo (ranked fifth in the survey) in 2004 where he has settled with a Japanese wife.
The father-of-three said that while rent could be expensive in the Japanese capital, as were supermarkets, especially those selling imported food, there were plenty of options — and price levels — for eating out.
“You can eat very well for an awful lot here and you can eat very well for very cheap,” he said. “It’s probably the best place in the world to eat cheap.”
Despite this, Miller said someone earning £40,000 ($52,900) a year who moved to Hong Kong from London would “really, really struggle to have the same standard of living” due to the high prices.
He said it might be possible to do in Tokyo, “but only if they were very careful, because you can easily spend that in a month here”.
Convenience
The Angolan capital Luanda, which previously topped the Mercer rankings but this year came in second to Hong Kong, is expensive for expats and locals alike — the effects of a long civil war that ended in 2002 are still being felt. The country is dependent on imports for nearly all its food, corruption is widespread and monopolised supply chains keep prices artificially high, although expats tend to pay even more as they are not buying in bulk or from markets with fewer overheads.
N’Djamena, the capital of Chad (ranked ninth in the Mercer list) is in a similar situation. “N’Djamena is surprising in this list as Chad is one of the world’s poorest countries,” noted Celeste Hicks, a former BBC correspondent in Chad.
But she explained: “Life for expats is disproportionately expensive mostly due to the high costs of imports. Chad is landlocked and more than 1000km from the nearest port at Douala. High taxes, government inefficiency and corruption all play a role.”
However, just like in Hong Kong and Singapore, it is certainly possible to spend less even in places like Luanda, N’Djamena and Kinshasa (ranked sixth) if you know where to look, and have the language skills and wherewithal required to prevent yourself being ripped off.

This article was originally posted on the BBC website here.