London has trumped Hong Kong as the world’s most expensive city, according to a report from international estate agent Savills.
For the first time since the Savills “Live/work index” was launched in 2008, London has outdone Hong Kong as the priciest city for companies to locate staff.
Londoners have been hit by resurging property prices—unlike in Hong Kong, where residential rents have fallen. On Monday, the U.K.’s Office for National Statistics reported that house prices in London and other areas of England and Scotland had rebounded to the levels seen before the 2007/08 global financial crisis.
More importantly for companies happy to locate their staff around the world, Hong Kong’s attractiveness has been boosted by the weakening Hong Kong dollar, while sterling has appreciated against the U.S. dollar.
Despite London’s climb in the rankings— from fifth to first place in the space of six years—the cost of living and working in the city is nonetheless less than the record set by Hong Kong in 2011 of $128,000 per annum. By comparison, it currently costs $120,568 for employers to locate staff in London in 2014.
“This year has seen much more modest real estate price growth in nearly all our world cities and some have shown small falls,” says Yolande Barnes, director of Savills World Research, in a news release on Tuesday.
World cities where the cost of locating staff has fallen this year include New York, Singapore and Shanghai, as well as Hong Kong, according to Savills.
“This lower level of price growth means that currency fluctuations have produced some of the biggest changes in our rankings, which are expressed in dollar terms,” Barnes said, adding that these currency movements are “likely to exercise” multinationals more than property markets.
Measured in U.S. dollars, it cost employers around four times as much to locate staff in London rather than in Mumbai, India, and almost three times more than in Shanghai, China.
Savills said that Hong Kong remains by far the most expensive city to buy residential property, with prices 40 percent higher than in London, but that the gap was narrowing.
“Hong Kong remains the only ‘New World’ city, from a recently emerged or emerging national economy, to feature in the top five cities,” said Savills. “Its position relative to the emerging markets of mainland China means that it is unlikely to lose this status in the foreseeable future, despite property market cooling measures.”