Saturday, 18 September 2010

Moscow slips to 44th in cost of living rankings

One survey rates Moscow as the fourth most expensive city for expats, another puts it at number 44.

Swiss bank UBS placed Russia’s capital 44th out 73 cities for cost of living, 42nd for wage levels and 39th for buying power. Top prices were found in Oslo, Zurich and Geneva, while the Swiss duo was joined by Copenhagen for big salaries. Bucharest, Manila and Mumbai are the cheapest to live in, which is just as well when Manila, Mumbai and Jakarta have the lowest wages.

It’s a stark contrast with the annual Mercer price index for expats, where Moscow has twice topped the pile and currently lies fourth behind Angolan capital Luanda, Tokyo and Osaka.

So how can one city be pricier than the likes of London, New York and Copenhagen, yet simultaneously cheaper than Kiev, Tallinn and Riga? Is this town really 40 points cheaper for locals rather than expats?

Mercer says it has nothing to do with foreigners getting ripped off here as such, and merely reflects the premium prices many expats are willing to pay for shopping and nightlife.

“As our survey is for expatriates we use an international basket of goods and services,” Nathalie Constantin-Metral from Mercer told The Moscow News. “We select international brands for comparison purposes across the cities we survey, and go to stores frequented by the expatriate population.”

Therein lies the rub: typically expat bars and shops in Moscow are very expensive compared to more everyday establishments.

“One of the elements of the basket is international quality accommodation for expatriates. Accommodation for expatriates can be very expensive in Moscow, as the demand is high, and the availability is limited,” she said by email.

“I can’t believe Moscow is so far down the list, there must be something wrong with it” exclaimed Moscow resident returned from London, Olga. “Clothes are three times more expensive here. You go into international brands like Zara… I have seen exactly the same item here that cost exactly three times more than on Oxford Street.” Technological gadgets like Ipods and computers are also more expensive, she said, “everything apart from food.”

James from the UK was most surprised that the cost of life should be so much cheaper than in other cities. “I would expect the cost of life, mainly due to the cost of rent and food to be disproportionately high compared to wages, which would automatically affect buying power,” he said.

Lawyer John said that overall life was not so expensive as back home in Chicago. “But the standard of living here isn't as good, so people seek out extravagance that they probably would do without at home…I think foreigners here get a little drunk on the fact that certain doors open for you in Russia simply because you're foreign, and that's probably an extra incentive to up the spending a bit.”

But teacher Hugo disagreed. “I am surprised that Moscow is quite so far down the list, but then again I don’t earn much here and I live perfectly reasonably. You really don’t have to spend that much on food, clothes, or rent if you know where to go. And certainly not on transport” He was scathing about frequenters of expat bars and users of luxury services, “If you use them then you deserve to be ripped off.” His colleague Olivia agreed, “Westerners want western brands and styles. They want salami from Italy, not kolbassa from a factory in the Moscow region… Expats don't pay more because they have to but because they want to.”

No comments: