Angola's Luanda beats Tokyo as priciest expat city

LONDON (Reuters Life!) - The capital of oil-rich but poverty-stricken Angola is the world's most expensive city for expatriates, according to a new cost of living survey that also showed other developing African and Asian cities were among the priciest in the world.

Luanda knocked the Japanese capital Tokyo off the top of this year's Mercer Worldwide Cost of Living Survey. Tokyo, regularly rated as one of the world's most expensive cities, was in the second slot while Ndjamena, the capital of impoverished, violence-ridden Chad, came in third.

The survey, which covers 214 cities across five continents and measures the comparative costs of more than 200 items in each location, said developing cities were actually more expensive for expats to live in than Western cities such as New York or Washington D.C., usually viewed as being pricey.

"Many people assume that cities in the developing world are cheap but this isn't necessarily true for expatriates working there," Mercer senior researcher Nathalie Constantin-Metral said in a statement.

"In some African cities, the cost of this can be extraordinarily high -- particularly the cost of good, secure accommodation," she said.

"We've seen demand increase for information on African cities from across the business spectrum -- mining, financial services, airlines, manufacturers, utilities and energy companies."

The ranking is based on the comparative cost of over 200 items in each location including housing, transport, food, clothing, household goods and entertainment. New York is used as the base city for the index and currency movements are measured against the US dollar.

Based on these criteria, three African cities -- Luanda, Ndjamena and Libreville in Gabon at seven -- were among the 10 priciest cities for the first time, reflecting the increasing economic importance of this region across all business sectors.

Asia's cities are also among the world's most expensive for expat postings: apart from Tokyo which is ranked second, Osaka comes in at 6 and Hong Kong is tied with Zurich at 8.

Highlighting the commercial importance to multinationals of locations other than just Beijing, Shanghai and Hong Kong, seven Chinese cities appeared in the 2010 rankings.

Based on these criteria, Oslo at 11, Milan at 15, and London and Paris, both at 17, were the most expensive cities in Europe while the least expensive city in Europe was Tirana in Albania.

Living in the Middle East isn't cheap either: Tel Aviv (19) was the most expensive city in the Middle East, followed by Abu Dhabi (50) and Dubai (55). Tripoli (186) in Libya was the least expensive Middle Eastern location.

"Accommodation costs have continued to decrease in Abu Dhabi and Dubai, driving down the cost of living for expats," Constantin-Metral said.

Brazil's commercial capital Sao Paulo (21) was the most expensive city in all of the Americas, a result of the strengthening of the currency against the dollar.

In the United States, New York (27) was the most expensive city, followed by Los Angeles (55). Washington, D.C., was ranked 111 and the least expensive U.S. city was Winston-Salem in North Carolina (197).

"The weakening of the U.S. dollar against a number of other currencies, combined with a decrease in the cost of rental accommodation, has pulled U.S. cities down the rankings," Constantin-Metral said.

And the world's least expensive city of expats? The Mercer survey said it was Karachi in Pakistan.

(Editing by Sugita Katyal)