LONDON: Mumbai has emerged as the world’s cheapest city to live and work in, among 12 top metropolitan cities of the world.
London, Hong Kong and New York are the world’s most expensive cities for companies to accommodate employees, with costs in London going through the roof, says Savills World Research.
The cheapest city in the index is Mumbai, where it costs just $29,088 to accommodate an employee, up only 2.4% since 2008, while Shanghai comes in at $38,089, up 15.6%.
On comparison, the index which measures the combined cost of residential and office rental per person per year found that London’s costs averaged $118,425 in the first half of 2015, an increase of 20.7% since the index was launched in 2008. This is marginally more expensive than Hong Kong where costs have risen just 0.4 per cent since 2008, and New York which has seen 28.4% growth.
San Francisco has been the biggest riser, with growth of 59.8% since 2008.
Yolande Barnes, director of Savills World Research said “Our Live/Work report says that while London, Hong Kong and New York are the world’s most expensive cities for accommodating employees, relatively speaking Mumbai’s real estate costs are more expensive as they are five times the average GDP, compared to London and New York where real estate is only twice and 1.5 times the GDP respectively.”
“Mumbai is the only city we looked at as it is the only ‘world city’ in India which shares in the same fame, prominence, international reach and ‘investability’ as other global cities such as New York, Hong Kong and Sydney. The average cost of living and working in the city has risen over the past seven years, from US$ 28,394 per year in December 2008 to U$29,088 per year by June 2015, but in comparison to other global cities it has seen the smallest increase – only 2.4%”.
“With India now likely to outperform China economically in the near future, we anticipate that there will be even more interest in Mumbai’s real estate, leading to the average live/work cost continuing to increase and making Mumbai even less affordable if the GDP doesn’t also increase at a rate that exceeds accommodation costs.”
So what makes London so expensive and Mumbai so cheap?
Barnes said “Mumbai’s live/work costs are low but it is actually the most expensive city to live and work in relative to productivity, with live/works costs a very high – five times per head GDP. This reflects the fact that most workers in the city do not live and work in the international-standard accommodation that Savills measures. London, meanwhile, has the highest live/work costs, but when this is compared to its GDP they are only twice the GDP, meaning that it is relatively cheaper to live and work in than Mumbai.”
Sydney and Los Angeles offer the best value live/work rent combination at 70% and 80% of per head GDP respectively, followed by San Francisco.
The average cost per head across the 12 leading world cities in the Savills study is $74,945 per year, which is 1.4 times the average city GDP per head of population.
Three cities – Tokyo, Dubai and Singapore have all seen live/work costs fall between minus 8% and minus 16.6% over the period since 2008.