Markets

10 Most Expensive Cities in the World

By Dan Burrows

Updated on: July 28, 2011 / 1:27 PM EDT / MoneyWatch

Tokyo is the world's most expensive city, a dubious distinction the capital of Japan has held for most of the last 20 years, according to the Economist Intelligence Unit's annual survey.

In what may be something of a relief to Americans, no U.S. city ranked among the world's 10 most expensive places to live. On the other hand, it's probably not a surprise that no U.S. city made the list of the globe's cheapest places, either.

Despite the human and economic cost of the earthquake and tsunami in Japan, the yen has strengthened significantly over the last two years, pushing Tokyo back to the top of the rankings, the survey says.

After Tokyo, half of the world's 10 most expensive cities are some of the usual culprits located in Europe, such as Oslo and Paris. However, in what must pain plenty of Australians, red-hot economic growth and a strong currency are rapidly pushing up costs in the land down under. Sydney and Melbourne jumped into the top 10 most expensive cities -- from 32 and 38, respectively -- in just two years.

For comparison, the Economist uses an index where the cost of living in New York equals 100. So Tokyo, with a top index ranking of 161, may be thought of as 61 percent more expensive than New York. Cost indexes are shown in parentheses.

Ten Most Expensive Cities (New York = 100)

Tokyo, Japan (161)
Oslo, Norway (156)
Osaka Kobe, Japan (153)
Paris, France (150)
Zurich, Switzerland (148)
Sydney, Australia (143)
Melbourne, Australia (141)
Frankfurt, Germany (140)
Geneva, Switzerland (138)
Singapore (137)

At the other end of the cost-of-living equation, cities in South Asia tend to be over-represented. Despite the rise of India as an emerging-market power, several of the world's 10 cheapest cities are found in the Indian subcontinent, the survey notes.

Ten Cheapest Cities (New York = 100)

Karachi, Pakistan (46)
Tunis, Tunisia (51)
Mumbai, India (53)
Tehran, Iran (55)
New Delhi, India (56)
Jeddah, Saudi Arabia (59)
Algiers, Algeria (60)
Panama City, Panama (60)
Manila, Philippines (62)
Dhaka, Bangladesh (62)

"Karachi in Pakistan is the cheapest location surveyed, with a cost of living level at less than one-half of that of New York and one-third of that of Tokyo," the survey says.

Weak currency and low levels of economic development are partly to blame. In some cases price controls and state subsidies also contribute to the generally lower costs found in South Asia, the Middle East and North Africa, according to the analysis.

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