Moscow Named World's Most Expensive City

[docetae]

An interesting report about global cost of living. Moscow is the most expensive city in the world ... Kiev is just after Rome ...

I wonder what kind of economic crisis theses countries are going to face if no change happened with salaries and prices continue to go up ...

[Bruno]

An interesting report about global cost of living. Moscow is the most expensive city in the world ... Kiev is just after Rome ...

I wonder what kind of economic crisis theses countries are going to face if no change happened with salaries and prices continue to go up ...

No sure that these report show some crisis... the price reference for a apartment is related to a Luxe apartment with two bedrooms... During the communist time, luxe apartment was only for the people with power, i mean high placed in the government... Now, you find luxe apartment for everybody but you pay the price...

A other factor... price are for expact... in Western country, price are the same for everybody... but in Russia, for the same apartment, you have different price... lower for local, a lot more high for foreign...

[Adel]

http://www.themoscowtimes.com/stories/2006/06/27/002.html


Skyrocketing real estate prices have made Moscow the most expensive place on earth for expatriates to live -- not to mention drink coffee -- according to an annual survey by U.S.-based Mercer Human Resource Consulting.

An "international standard" two-bedroom unfurnished apartment in Moscow costs over $3,100 per month, as opposed to $2,800 in Beijing and $2,390 in Paris, according to Mercer's calculations.

The survey ranks 144 world cities according to prices of goods and services in 10 categories, from groceries and restaurant meals to utilities and sporting events, as well as the price of rental accommodation.

Moscow claimed the top spot from Tokyo, which fell to No. 3 this year, followed by Hong Kong and London. New York City held 10th place, and St. Petersburg rose three places, to 12th.

But some of the benchmark costs Mercer used for its survey drew laughs from Moscow expatriates, including $5.62 for a cup of coffee, $6.11 for a copy of "an international daily newspaper" and $24.36 for a CD.

The International Herald Tribune has a Moscow newsstand price of 90 rubles ($3.33), while a cappuccino at the popular cafe chain Shokoladnitsa costs 95 rubles ($3.50).

The price rises to 145 rubles ($5.35) -- nearer the Mercer marker -- for a mega cappuccino with gingerbread syrup.

 
CDs, though often of questionable provenance, are sold in Moscow's countless kiosks and markets for 100 rubles to 200 rubles ($3.70 to $7.40).

Mercer senior researcher Anna Krotova said she stood by the company's methods.

"We have researchers in every city who collect prices and send them to Geneva, where they are peer-reviewed and checked with people who are aware of the Moscow situation," Krotova said by telephone from Geneva.

The ranking is not meant to reflect the cost of living for the city as a whole, but for the high-stepping expat community, she said.

"In Moscow, the gap is particularly high because of the gap in income between foreigners working in international companies and the income of ordinary people," Krotova said. The survey "is really for expatriates and maybe for high-income local residents."

The average Russian made 8,530 rubles ($315) per month as of the end of 2005, according to the State Statistics Service.

Moscow has been near the top of the heap in Mercer's annual ranking for several years running. It held the No. 2 spot in 2000 and 2001 before sliding to No. 4 last year.

One of the sharpest rises on the ranking came from Kiev, which leapt from 54th place to 21st, due to rising costs and the appreciation of the hrvyna against the U.S. dollar.

Sao Paulo and Rio de Janeiro made even more dramatic jumps, from 119th and 124th place to 34th and 40th, respectively.

Driving Moscow to the top were apartment rental prices, which rose "quite sharply this year," Krotova said.

Beatrix Real Estate, which caters to Moscow's expatriate community, lists typical two-bedroom apartment rental rates from $2,500 per month for a building with "basic renovation" -- slightly below Mercer's benchmark -- to $20,000 per month for exclusive properties with designer furnishing.

American businesses working in Moscow routinely pay $5,000 per month to rent their employees apartments in the city center, said Andrew Somers, president of the American Chamber of Commerce in Russia.

"I certainly am getting a lot of feedback from our members that it is very expensive here," particularly in terms of housing costs, said Elena Settles, regional coordinator for the Canada Eurasia Russia Business Association, or CERBA.

Though many CERBA members receive free or heavily subsidized housing through the Canadian Embassy, "people who do rent or buy places here say that they are ridiculously expensive," Settles said.

Neil Withers, a Montreal native who has lived in Moscow for nine years and currently works for Bank Vozrozhdeniye, said he could not help noticing rising costs in apartment rents and restaurant bills, but that he still looked skeptically on the claim that Moscow was the most expensive city in the world.

Many expats, even at the executive level, learn to take advantage of Moscow's abundant bargains -- among them gypsy cabs that cost a fraction of what professional taxis do, Withers said.

"A lot of people I know of, even without a whole lot of language skills, get familiar pretty quickly with how to take a cab in Moscow," Withers said. "I don't really think it is fair to say the city is the most expensive in the world because of something like taxi fare."

Withers also said he was a regular metro rider -- a prospect that Mercer found so unlikely, it did not take into account the relative price of bus and metro fare in the city when calculating Moscow's expat cost of living.

While the survey listed bus and metro fares for London, Paris, Rome, Berlin, Warsaw, Tokyo and Buenos Aires, among other cities, it listed Moscow's transport prices as "not applicable."

A single ride on the Moscow metro costs 15 rubles ($0.55), versus $2 for the New York subway or £3 ($5.46) for a single-zone ride on the London metro.

"We previously haven't listed these prices because most expatriates wouldn't consider taking a bus," Mercer's Kotova said. "But this is something we will definitely have to change in the future."

Mercer also left public transport out of the calculations for Zagreb, Beijing and Johannesburg.

[BillyB]

Yep, Moscow's expensive. Been there, done that.

[andrewfi]

Mercer's survey, like most other price surveys are based upon a person who does not venture more than 30 steps from the front door of his business class or better hotel, or expat market apartment. It is a common criticism of these reports by both businesses and travellers.

Moscow is the most expensive city in Russia in many respects, although if one were to try to recreate the expat bubble in the hinterland, then prices would be even higher, but these surveys do not reflect what most business travellers find. That said, I know expats who do live entirely in 'the bubble', whose employers, often the government, pay whatever is required to maintain an 'at home' lifestyle. For these people, these kinds of prices are realistic. They would be getting into their chauffered car to go to high end shopping arcades where the staff all speak perfect English and buying European pressings of CDs, taking facsimile copies of newspapers and living in apartments that would be either way too expensive for the locals or not good enough for the local wealthy folk, but in any case, overpriced.

But, if you are able to persuade your employers to pay your PDs on the basis of these reports then one is pretty much happy as a pig in sh1t.

Do not for one second, as the commentary correctly points out, carry away the impression that this report bears any resemblance to the reality for locals or even most expats.

[andrewfi]

whoops duplicate thread, suffice it to say that these reports bear no resemblance to the realities for 'real' people, or even most expats.

[jb]

Being married to a Moscovichka who is presently in Moscow for a month-long home visit, I have the benefit of my wife's current, 1st hand, experiences in Moscow from a decidedly Russian perspective.  She is absolutely appalled by the changes of economics Moscow has gone through in the past couple of years.  Food, clothing, and other essentials, are now priced about the same as here in the US, and prices for real estate has gone through the roof. 

Contrary to Bruno's claim that there are two price schemes for deluxe flats in Moscow, i.e., their's and ours, we see that her Moscow 4 room flat is now valued at something over $300,000 now, compared to slightly over $100,000 three years ago.  These are the prices a Russian would be expected pay for the flat, not an ex-pat foreigner.  The old dacha we would have happily sold for $5,000 three years ago if we could have found a buyer, is now commanding the princely sum of $30,000 for the land only.  The reason being told to her for this unnatural hike in property value is that the government has recently run a natural gas pipeline into the community, converting what was once a "summertime only" residential area into a "year 'round" community.  This old dacha is located in the third tier of country estates outside Moscow and has always been a popular Alpine skiing area, thus the addition of reliable gas utilities has made what was once a winter weekend, or a day trip for fun, into a place that attracts attention for more permanent structures.

Moscow is indeed expensive.

Unfortunately, salaries and wages in Moscow have not generally kept pace with the inflation rate.  My wife visited with her old co-workers this month and has learned that if she had remained in Moscow, (not married me), she might expect to be earning, maybe/about, an additional $250-300 per month which would represent an average 25% increase over the past 4 years instead of the more than 100% inflationary cost-of-living increase experienced by Moscovites in the same time frame.  In other words, those people living in Moscow who once had a fairly comfortable middle class life style 3-4 years ago, are now feeling the pinch. 

For what it's worth.

[jb]

Deleted as unnecessary since the two threads have been merged...

Moderator should feel free to remove this post as well.

[ConnerVT]

I think everyone has been correct in their observations so far.  Each is just looking at one part of a much larger animal.

In all large cities, their are many different levels of existence.  For each of the Donald Trumps living in luxury, there is also a home for the doorman and the housekeeper that maintains the place.  Each find a level which they can maintain a lifestyle on their income.

The study was also plain to state the market (or level) which it focused on -- the ex-pat whom is living on the company dole, be it directly or indirectly paid.  This may actually be the fairest method of measure, for it allows for the people who conduct the study to be ignorant of the many idiosyncrasies that life in each of the cities may present.

I think jb's comments are the most eye opening.  For his wife's observations of Moscow are not in a vacuum.  These effects trickle down to the other towns and cities throughout Russia.  After all, Moscow is the financial mecca of Russia.

The effects are being felt in Tver as well.  Inflation has certainly outpaced the incomes most people earn.  In a place where only some people were beginning to move into what the West would call "middle class", the gap between the 'haves' and 'have nots' is beginning to increase.  We (my family) pay bills in both countries, and we have been seeing the cost of everything increase at a pace that would cause revolt here in the US.  Time will see if Russia gets a handle on it.

[andrewfi]

I was pointing out that the methodology used is flawed, the commentary was not the report, but written by a journalist accurately pointing out the flaws even from the point of view of the expats and business visitors that Mercer's reports are supposed to serve. Mercer have the same problem in every city.

The Mercer report is NOT about how ordinary people live, but people, including people here who should know better are still uncomprehending. This is an issue that has been ongoing for years but it is for Mercer an annual shot of cheap PR. They get thousands of column inches every year from their 'reports'.

For most people in Moscow housing is, essentially, free. New buys are often subsidised by the equity fictionally built into the homes owned by the older generation and the inheriting middleagers. It is a market dynamic common to large cities in the FSU where housing, once socialised is now private.

Is rented accommodation expensive? Euro remont stuff is, but most people do not live in Euro remont or even cap remont apartments. Is there a double market for foreigners and locals - yes there is becasue there are propoerties that are designed for foreigners to use and they are charged at very high rents. Locals will usually prefer to buy than rent such places and foreigners usually turn their noses up at cap remont or non remont stuff. So whilst there is not explicit dual pricing, in practice there is. Again we see the same dynamic in Tallinn, it exists in most large FSU cities with any significant concentration of foreigners. Does the housing market cause problems for people? Yes it does, people who are not lucky enough to have parents in formerly socialised housing, foreigners not living in the bubble and Russians moving in from the provinces - people without access to equity to give effective discount on the purchase price. In fact pretty much the same situation as in the UK or US with the exception of the socialised housing and the huge amounts of equity the situation has generated..

[ConnerVT]

So Andrew... What is your point?   

[Jet]

I think jb's comments are the most eye opening.  For his wife's observations of Moscow are not in a vacuum.  These effects trickle down to the other towns and cities throughout Russia.  After all, Moscow is the financial mecca of Russia.

Lil and I were just talking about this last night, as she too is shocked at what she's returned to this year. As just a few examples of everyday life she made income percentage comparisons at the local market this weekend: can of peas=25p[$0.95], skirt=400p[$15.00], low quality shoes (think "payless" or worse)=1600p[$60.00] BUT if she had to buy those items on the current salary of her former coworkers, it would be like paying $34 for the peas, $495 for the skirt, and just under $2,000.00 for the shoes based on her current income here in the states. 
Property taxes on the house and the apartments will EXCEEDE what her russian salary would have been this year.

[jb]

For most people in Moscow housing is, essentially, free. New buys are often subsidised by the equity fictionally built into the homes owned by the older generation and the inheriting middleagers. It is a market dynamic common to large cities in the FSU where housing, once socialised is now private.

Andrew,

Moscow housing is not free, by any stretch of the imagination.  The principal reason for the real estate boom in Moscow is the relative rapid population growth and the lack of new housing starts.  In the past 3 years Moscow's census has gone from 11 million souls to something in excess of 13.5 million.  Building new habitation has not kept pace. With the recent spate of new building fraud, where developers took large cash down payments from people for lavishly concocted scams whereby they promised to build, they even had beautifully rendered artist's conception paintings and blueprints of new luxury apartments, but absconded with the money in the dead of night and never laid one brick upon another, all this has left Moscovites willing only to pay good money for existing flats.

I know you think you know, but Tallin is not Moscow.  Completely different kettle of fish altogether.

[chivo]

make no mistake, Moscow is expensive, and yes inflation has exceeded income growth, something its done in America because of housing costs and energy prices. but...

all of you (almost all) have made good points about how it affects locals as well as the foreigners.

lets start with real estate. they're also forecasting the bubble to burst here like in, well, say America. as jb pointed out, and to anyone else who has an inkling about real estate, its all about supply and demand. but i will contend that you have no more ease at buying a house in the US as you do here.

for example, i can buy a decent 2-room apt here, in a good neighborhood, relatively close to the center of town for around 100-130k (about 6-700 sqft), now compare that, apples to apples, meaning distance to the center of town, size, quality, etc. to places like San Fransisco, New York (especially Manhatten), San Diego, Boston, etc. and then tell me. also remember that Russians still buy (yes even real estate) cash, meaning 2 things: 1) they don't have a mortgage, and 2) they can afford it (my friend, a 23yr old woman at that, just bought an 1-room apt for $90,000 cash with her parents help, so you know they have money, a little farther out from the center than where i live, which for anyone who knows they area, is VDNKh).

again many Russians can't do this of course, but how many Americans can buy a house now in the areas i mentioned above, where what she paid would be less than what is required for a down payment?

further, compare it to income. remember what a Russian makes legally (tax wise) will not, in many cases reflect the true income. i will admit that income to housing costs are worse here, but people here have more money than you think, and there is an incredible burgeoning middle class here that if you haven't been here in the last few years, you might not see in just a months stay. so again, things can be deceiving. 

when you live here you learn where to buy, when to buy, how to buy to get the best prices and the most bang for your buck. whats my take after 2 years in Moscow about expenses compared to my life in Los Angeles. well,

1) food is about the same, restaurants and supermarkets.
2) cars are more expensive (you really don't need one) but maintenance is less.
3) clothes are way more expensive (i buy mine when i visit the US ).
4) entertainment, attractions are much less for Russians and me sometimes
5) mass transit is much less and more efficient
6) while real estate is expensive, renting comparable to what you get in LA is less. utilities are much less as well.
7) at least for me, my income is about the same as LA (i rent my house and get positive cash from it)

now, back to the main point about Moscow being the most expensive city in the world, well its just not...period. as was pointed out the numbers are just BS. i could go on and on about what is and is not expensive, but ill wrap it up with this.

my friend (Moscovichka) just returned from a 2-week stay in London. when she returned to Moscow i asked her about her trip and the very first thing she said to me was, boy, London is soooooo expensive. now you be the judge of that. good luck and peace out.

chivo
p.s im not saying Moscow is not expensive, all things considered, it is. but the most expensive city in the world...bullshit.

[andrewfi]

jp ~ If we accept your figures then you can see that most of the inhabitants of Moscow have been there for a while. All the people who had apartments and homes at the time of the privatisation of homes got them for free (or nearly so - depending upon size of family/apartment and the rules of the privatisation). They pay only maintenance and admin costs. The majority of households in Moscow are either in that position, or leveraged that position to move up and out. If they leveraged their equity they are not paying huge loans off. If they have not moved they have free housing.

The people who are not in that fortunate position, as already noted, are the newcomers, for whatever reason - Just as in every large city in the FSU where privatisation of housing occurred. And those who have grown to adulthood since privatisation - those people are helped through the use of the huge equity in their parents homes. These things are true and common. Moscow is not any different in this regard. True, it has been a little later in having ready availability of mortage finance and it is this availability that, like elsewhere is helping to push housing prices upwards. The majority who never move can and do help their families to become home owners and often little tycoons - just as elsewhere.

Conner ~ I was attempting to clarify the original post which had obviously confused many posters to the thread. I reckon if the posters were confused, there are many more readers who were similarly confused.

[Bruno]

Do you think that it is possible to find $100 hamburger in Moscow ? In USA, it is possible :

http://wcbstv.com/watercooler/watercooler_story_172094004.html
Fla. Restaurant Sells $100 Hamburger

A hundred bucks might buy you more than six dozen burgers from McDonald's, but the the swanky Old Homestead Steakhouse will sell you one brawny beef sandwich for the same price.

Boca Raton Mayor Steven Abrams could barely speak between bites as he devoured the 20-ounce, $100 hamburger billed as the "beluga caviar of sandwiches."

"Heaven on a bun," restaurant owner Marc Sherry said.

The burger debuted Tuesday at the restaurant in the Boca Raton Resort and Club, where a membership costs $40,000 and an additional $3,600 a year.

"We've never had a hamburger on our menu here so we really wanted to go to the extreme," Sherry said, calling it "the most decadent burger in the world."

At about 5 1/2 inches across and 2 1/2 inches thick, the mound of meat is comprised of beef from three continents _ American prime beef, Japanese Kobe and Argentine cattle.

The bill for one burger, with garnishing that includes organic greens, exotic mushrooms and tomatoes, comes out to $124.50 with tax and an 18 percent tip included. The restaurant will donate $10 from each sale to the Make-A-Wish Foundation.

Membership $40,000 and additional $3,600 a year, hamburger with garnishing at $124.50  some people don't live in the same world that other...

[andrewfi]

Can you imagine the kind of people who would mince Kobe beef and make it into a hamburger.

I sometimes wonder if the 'end of days' nut jobs are in fact correct, but in different terms to those they imagine.