London, New York and Hong Kong are still streets ahead when looking at the cost of living and working space for workers.
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And as prices of office and residential accommodation keep climbing, yields are shrinking and investors may have to start looking at less attractive locations to maintain a steady return on investment.
The conclusions come from the latest 12 Cities report from international real restate consultants Savills.
The report compares the costs of keeping a worker in 12 global cities and London has just nudged ahead of New York and Hong Kong as the world’s most expensive location.
The cost of keeping an employee in London is US$118,435 – compared to $116,661 in Hong Kong and $114,208 in New York.
The average work/living cost for the 12 cities in the report is $74,945.
Investment pay off
The researchers confess accommodation costs are not always the best indicator of working out affordability of a city for firms and employees.
The report also looks at the cost compared to GDP – which results in Sydney offering the best living/working measure at 70% of GDP, followed by Los Angeles at 80%.
Mumbai tops the table at 500% GDP, mainly because few workers in the city live or work in international standard accommodation.
The average of all 12 cities is 1.4 times GDP, while that for Hong Kong is three times and falling, London two times and stable, while New York is 1.5 times and rising.
“The idea is to show which cities are likely to put the no space for rent signs up and which can absorb the cost if rents go up,” said Yolande Barnes, director, Savills world research.
“The figures also show how real estate investments have paid off in some cities.”
12 Cities living and working costs
| Cost per Employee | Change since 2008 | |
| London | $118,425 | 20.70% |
| Hong Kong | $116,661 | 0.40% |
| New York | $114,208 | 28.40% |
| San Francisco | $88,177 | 59.80% |
| Paris | $84,343 | 3.20% |
| Tokyo | $71,296 | 8.00% |
| Singapore | $67,491 | -16.60% |
| Dubai | $59,426 | -13.90% |
| Los Angeles | $53,192 | 21.30% |
| Sydney | $52,994 | 18.00% |
| Shanghai | $44,043 | 15.60% |
| Mumbai | $29,088 | 2.40% |
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