London has become the world's most expensive city for companies to locate employees, according to a study done by Savills plc, a global real estate services provider. Hong Kong had topped the ranking as the most expensive city for the past five years, since Savills Live/Work Index was launched in 2008.
The index measures the total costs per employee of renting living and working space on a US dollar basis in 12 world cities.
In its 2014 ranking, Hong Kong was ranked second, followed by New York and Paris. According to Savills, in these four cities, the combined costs of renting residential and office space top $100,000 per employee per year.
Mumbai retained its position as the cheapest world city, at $$30,000 per person per year, down 21 per cent in US dollar terms since 2008.
Savills says that currency fluctuations would be a major determinant of cost in these 12 cities given that real estate price growth has remained modest.
"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 Savills World Research. "We expect this subdued trend to continue as investor interest and market activity shifts to second-tier cities."
"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. For multinationals looking at their local costs, it is this which is likely to exercise them more than property markets over the next year".
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