Bellerbys Economics - Mr Stephenson

Sunday, August 12, 2007

World's Most Expensive City

Which is the World's most expensive city to live in? New York? Paris? Tokyo? No, it's Moscow, according to the Mercer Human Resource Counselling Group - an organisation that helps multinationals set salary levels for their executives in different countries.

Moscow has the world's highest concentration of billionnaires (that's billion, not million) with over fifty of them - and a small army of millionnaires. This does, however, illustrate to some extent the growing inequality in Russia (Gini Coefficient of 53 whereas 40 is seen as 'acceptable'). Moscow also appears to be developing a two-tier society quite quickly, suggesting an even higher coefficient in the capital. One group - the very rich - live in protected estates with high security, shop only in the expensive malls around Alexander Gardens and the Kremlin, educate their children overseas and have holidays in Florida and Goa. For this group, a cup of coffee in the restaurants around Stary Arbat through Tverskaya costs an average of £3.14. Most Muscovites, however, live a different life - not so very different from people in the UK. If you know where to look, you can still get a cup of coffee in the local shopping areas for 30p.

London is the world's second most-expensive city with housing costs being the main reason for this. Average price for a house in London is now £350,000 - much higher as you move towards the centre. This is about 18 times the annual earnings of the modal average group. Ironically, part of the problem surrounding housing costs in the capital comes from rich overseas investors and property groups injecting money into the capital's booming housing market (and football clubs like Chelsea!). On the other hand, if it wasn't for the size of this capital injection, the UK might have some difficulty coping with its poor current account position - swings and roundabouts, as we say here.

Cities 3, 4 and 5 are all in the booming Asian economy - Seoul, Tokyo and Hong Kong. Much of the investment for China's booming economy comes from these three financial centres and profits flood back. Seoul is also helped by the strength of the won at the moment, increasing the relative strength of average earnings in dollar terms. Hong Kong now has officially the world's greatest concentration of millionnaires with more than 1 in 20 of the population being in this fortunate position according to Guangdong News. As half of these live on Hong Kong Island, it means that 1 in 7 people on the island are millionnaires.

And what's the world's cheapest city? That can be a bit difficult to decide depending on how you define a city - but it looks like it could be Asuncion in Paraguay. In Asuncion, a beautiful riverside property, will cost you £36,000. It's easy to buy property in Paraguay which welcomes overseas investment with no restrictions and property prices are rising by 10% a year in real terms - so you should even make money from the deal. Worth a thought on a cold rainy day in England!


  • London is also the most expensive place because it has become on of the biggest players in the financial world.

    By Anonymous London, at 12:01 pm  

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