London has overtaken Hong Kong as the most expensive city for companies to locate employees.
The latest 'Live/Work Index' from Savills sees Paris and New York complete the four leading cities - where the combined costs of renting residential and office space top US$100,000 per employee per year.
It says a combination of falling residential rents and weakening currency has boosted Hong Kong's competitiveness, knocking it off the top spot for the first time in five years.
Total real estate costs in Hong Kong were down 5.6% in the first six months of this year, putting the current average price of renting residential and office space there back to 2008 levels, at US$116,000 per employee per year.
By contrast, London real estate costs grew in US dollar terms by an annual rate of 10.6% in the first six months of the year - so London has now become the most expensive world city to accommodate staff, at US$121,000 per year.
"This was largely due to the UK pound's recent appreciation against the US dollar. Overall, the US dollar cost of residential and commercial accommodation in London has increased by 39% since 2008," it adds.
It finds that Hong Kong remains the only 'new world' city - from a recently-emerged or emerging national economy - to feature in the top five cities.
Hong Kong - the only 'new world' city on the list | Image: Discover Hong Kong
"Its position relative to the emerging markets of mainland China mean that it is unlikely to lose this status in the foreseeable future, despite property market cooling measures."
It says the the city remains by far the most expensive city in which to buy residential property, with prices 40% higher than London - but the gap is narrowing.
The index measures the total costs per employee of renting living and working space on a US dollar basis in 12 world cities.
Fluctuations in costs not only reflect the strength of a city's residential and office markets, but also the impact of fluctuating exchange rates on the cost of doing business on a global stage. "It is this that has contributed in large part to London's recent ascendency in the rankings", it says.
Tokyo has also fallen down the rankings, while Rio de Janeiro and Sydney have seen significant increases in costs. And Mumbai retains its position as the cheapest world city, at US$30,000 per person per year, down 21% in since 2008.
"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 of Savills World Research. "We expect this subdued trend to continue as investor interest and market activity shifts to second-tier cities."
No Irish city features in the final 12.
