By Fiona Hurrell, Senior Contributing Reporter
RIO DE JANEIRO, BRAZIL – They may have dropped a place or two since last year but once again, Brazil’s two major cities, São Paulo and Rio de Janeiro, feature amongst the top fifteen most expensive cities in the world, according to Mercer’s annual 2012 report. In contrast, the score for quality of living remains markedly low for both cities, failing to make it into the top 100.
Designed to examine a city’s quality and cost of living, the Mercer report is a valuable source of information for multinational companies and other organizations in order to compensate employees fairly when placing them on international assignments.
In 2011 São Paulo and Rio were ranked as 10th and 12th respectively in terms of cost of living. Therefore, despite undergoing a slight improvement, (São Paulo now features 12th and Rio 13th) both still occupy the top two spots as most expensive cities in the Americas (North and South), with Brasília ranked in fifth.
In regard to the quality of living ranking, Senior Researcher at Mercer, Slagin Parakatil, reveals, “Political and security issues, along with natural disasters, continue to hamper the quality of living in South and Central American cities. High crime levels also remain a major problem.”
Quality of living is determined by 39 factors within ten categories, which include political and social environment, economic environment, medical and health, education, consumerism, housing and more. Like Rio, many of the South American cities have remained in the same position as last year suggesting that although things haven’t worsened they have not improved either.
As for the high cost of living rank, financial investor and economist Raphael Fraga points out a few areas driving costs. “The main aspects are the international events followed by the emergence of international companies and the discovery of oil which have made Rio a prosperous and rewarding city in which to live.”
He continues, “Then there is the real estate factor with the majority of people wanting to live in a certain area. This pushes housing prices up phenomenally and contributes to the cost of living.”
As was the case in 2011, housing cost is one of the key factors that affect the city’s high score on cost of living. Real estate agent Marcio Teixeira da Silva believes that the major sporting events combined with improvements in public transportation have pushed real estate cost up considerably. This directly affects expatriates who wish or need to live in Rio’s more lucrative areas.
He explains, “Big events promoted developments on infra-structure which has promoted a price increase on new units, and all markets adjust the prices including the land owners.” He also adds, “Maybe we will have a stabilization after the Olympics but sincerely I don’t think the prices will come down.”
American expat Matt Bresloff lives and works in Rio as a personal fitness instructor. He explains how he finds lifestyle expenses far greater compared to his native New York, stating “I buy whatever I can like clothes and supplements in the U.S.. Unless you are making a ton of money and/or have a wealthy family it is going to be a financial struggle living in Zona Sul [South Zone].”
It’s not all bad news though; Mercer recently launched a separate ranking for infrastructure based on water availability, traffic congestion, telephone and mail services, transport, air travel and electricity supply. For this, Rio does manage to make it in to the top 100 and with current plans and work already underway to improve the city’s transport system and airports, next year should hopefully see Rio rise further.