In 1998, Moscow was in crisis. More than 100,000 Russians took to the streets as a slew of banks–and the life savings of millions of citizens–went bust.
But just a decade later, the global commodities boom has made Russia flush with cash, and Moscow has become a pricey place to live.
That’s the finding in Mercer’s 2008 Worldwide Cost of Living Survey. Moscow tops the list with a score of 142.4, up 6% from last year–and 42% higher than New York, the most expensive city in the U.S. The Russian capital is followed by Tokyo; London; Oslo, Norway; and Seoul, South Korea.
New York fell from No. 15 to No. 22, thanks to the dollar’s protracted woes. Los Angeles is the second-priciest city in the U.S., but Hollywood’s denizens can’t cry poverty just yet: At No. 55, Los Angeles is cheaper than the best neighborhoods of Lagos, Nigeria (No. 30); Almaty, Kazakhstan (No. 44); and Zagreb, Croatia (No. 49).
“The decline in the ranking of all U.S. cities is due to the weakening value of the U.S. dollar against most major world currencies,” says Mercer’s Mitch Barnes, a principal at the firm. “The dollar has been declining steadily for the past several years, which has resulted in an overall decrease in the cost of living in 19 U.S. cities, relative to other major global cities studied.”
Behind the Numbers
The survey covers 143 cities across six continents and measures the relative cost of over 200 items in each place, including housing, transport, food, clothing, household goods and entertainment. The survey is used to help American government agencies and multinational companies determine living costs for their expatriate employees, who usually demand a relatively high quality of life.
“Companies may assign high priority to expansion in these economies, but may have to deal with inflationary pressures due to competition for expatriate-level housing,” says Yvonne Traber, a research manager at Mercer.
In the wake of the Federal Reserve’s bailout of mortgage lenders Fannie Mae and Freddie Mac, the dollar has continued its slide, falling to a record low against the euro earlier this week. While that’s bad news for Americans traveling abroad, it could mean that more international businesses will set up shop in the U.S., where posh cities are suddenly becoming much more affordable.
“The U.S. dollar’s loss of value may serve to attract globally mobile executives to business centers such as New York, Chicago and Los Angeles,” says Barnes. “The difference in cost of living can be significant, particularly for those executives with families.”
Most Expensive Meccas
As for Moscow, prices in the Russian capital show no signs of dropping. The global commodity boom continues to fatten the pockets of local tycoons, and the ruble has appreciated 8% against the dollar since January.
Moscow is home to 74 billionaires, the most of any city in the world. Its three wealthiest citizens (Oleg Deripaska, Vladimir Lisin and Roman Abramovich) each possess fortunes in excess of $25 billion. And Russia’s super-wealthy are just getting started: 13 of the country’s billionaires are under the age of 40.
Founded by the Romans nearly 2,000 years ago, No. 3 London is an ancient stalwart when it comes to pricey cities. Though it slipped from last year’s No. 2 spot, it remains extremely expensive–even a ride on one of the city’s vaunted double-decker buses costs $5.89.
And while Japan’s economy is stagnating, Tokyo is as expensive as ever. For American travelers, the city’s real estate prices are the highest in the world–a two-bedroom luxury apartment costs over $5,100 per month, about $600 more than a comparable pad in Moscow or New York.