Thanks to a strong appreciation of the Brazilian Real against the US dollar, São Paulo has become the most expensive city in Latin America, followed by Rio de Janeiro, according to the 2006 worldwide cost of living survey from US-based consultancy Mercer Management.
Asuncion in Paraguay remains the least expensive in Latin America, according to the survey, which measures the comparative cost of more than 200 items, including housing, transport, food, clothing, household goods and entertainment in 144 cities worldwide.
The survey uses New York as the base city, with a score of 100 points. The survey, the most comprehensive of its kind, is used by multinational companies and governments alike to help determine salaries for their expatriate employees.
The Brazilian cities aren’t the only ones that have become more expensive. Of 16 Latin American cities surveyed, only one became less expensive (Santo Domingo) and another (Bogota) kept its score.
Brazil Jumps
But São Paulo and Rio made the most dramatic jump on the ranking, going from 119th and 124th place last year to 34 and 40 this year, respectively. São Paulo’s score went from 66.6 to 85.0, while Rio’s score jumped from 65.4 to 83.5 points.
"These movements are due to the strong appreciation of the Brazilian Real against the US dollar (more than 20 percent), which has occurred as a result of solid economic growth and increased foreign investment over the last two years, together with reduced public debt and high interest rates," Mercer says. "In particular, the cost of international-standard accommodation has risen significantly in these cities."
Renting a two-bedroom, unfurnished luxury apartment in São Paulo typically costs $1,935 a month, while in Rio it would cost $1,888. Both figures are higher than the rates for similar apartments in cities like Madrid, Rome or Amsterdam.
Mercosur Cheap
While Brazil’s top cities are the most expensive, the capitals of the other three Mercosur countries are among the least expensive: Asuncion, Buenos Aires and Montevideo. They are followed by Caracas, the capital of Venezuela, which is scheduled to join Mercosur next month.
A two-bedroom, unfurnished luxury apartment in Buenos Aires rents for $999 a month. While Buenos Aires has become more expensive the past year, with its score going from 50.3 to 54.8 points, it remains among the least expensive cities worldwide, with a global ranking of 142. Buenos Aires is less expensive than cities like Manila in the Philippines and Bangalore in India.
Asuncion’s score of 43.5 actually made it the least-expensive of any city worldwide, according to Mercer.
Santiago Jumps
Mexican capital Mexico City, which was the most expensive city in Latin America last year, also has become more expensive, going from a score of 73.1 points last year to 77.2 points this year. But its global rank fell from 95 last year to 81 this year and in Latin America it’s now ranked third behind São Paulo and Rio. A two-bedroom, unfurnished luxury apartment in Mexico City now rents for $1,797 a month, which is also higher than charged in most European capitals outside of London and Paris.
Chilean capital Santiago jumped both in rank and score. Its rank is now 91 worldwide, up from 128 last year. Its score is 74.5 points, a clear increase from the 64.8 points it got last year. Within Latin America, Santiago went from being the ninth-most expensive city to the fourth-most expensive city. Renting a two-bedroom, unfurnished luxury apartment in Santiago these days means paying $1,281 a month.
Guatemalan capital Guatemala City followed Santiago, coming in at fifth place in Latin America this year. Although that was better than last year’s third place, the city jumped in global rank and score. Its global rank went from 108 last year to 93 this year, while its score jumped from 70.4 to 74.3 points. That means Guatemala City remains the most expensive city in Central America and within the CAFTA trade pact (excluding the United States).
Santo Domingo Less Expensive
Dominican capital Santo Domingo represented the only "good news" on the list. Thanks to a depreciation of the Dominican peso against the US dollar, its global rank fell from 99 to 126, while its score went from 72.3 to 65.3 points. Within Latin America, Santo Domingo has gone from being the second-most expensive city to the ninth-most expensive one.
Meanwhile Colombian capital Bogota kept its score of 62.7 points, although it jumped slightly its global rank – from 133 to 130. While more expensive than Caracas, Bogota nevertheless is less expensive than other top cities in Latin America. For $886 a month, expats can rent a two-bedroom, unfurnished luxury apartment in Bogota. That’s 118 percent less than in São Paulo and 103 percent less than in Mexico City. It’s actually also 12.7 percent less expensive than the going rate in Buenos Aires, the Mercer survey shows.
But cost of living isn’t everything. According to a new ranking over the best business cities in Latin America by America Economia magazine, São Paulo is the best city and Asuncion the worst.
This article appeared originally in Latin Business Chronicle – http://www.latinbusinesschronicle.com
