mercer cost of living 2010 survey expats expatriate allowance

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Mercer's 2010 Cost of Living survey highlights - Europe



Global overview

Regional focus

  • Europe
Top 5 cities - Europe
  •  Moscow, Russia (4th)
  • Geneva, Switzerland (5th)
  • Zurich, Switzerland (8th)
  • Copenhagen, Denmark (10th)
  • Oslo, Norway (11th)


Inflation as measured on the Mercer basket of goods has remained relatively low in Europe. The Euro gained more than 6% against the US dollar between March 2009 and March 2010. However, the Euro has started to loose ground since April 2010.


The weakness of the Euro and the UK Pound will impact the outcome of the March Cost of Living indices.


  • Euro and GBP outbound cost of living indices are likely to increase in order to offset the weakness of the Euro and GBP. Higher indices will compensate for much of the currency weakness.
  • Euro and GBP inbound cost of Living indices are likely to decrease where the home country currency has become stronger. This ensures that assignees paid in stronger home country currencies do not gain because of the currency fluctuations.


Since March 2010, the Euro continues to lose ground. To illustrate this point, it has lost almost 6% against the Indian Rupee. As a consequence, the Mean to Mean Cost of Living index Paris – New Delhi increases from 75 to 78.


A number of firms do not apply negative cost of living indices, which means that in places where the cost of living in the host location is lower than in the home location, the assignees benefit from the difference in living costs.


In case the Cost of Living index increases, but remains below 100, the expatriates will see no change in their allowances, and may perceive they are loosing money. In one way, this is true, as the windfall they have enjoyed is reducing, but it is still a financial gain that the employees enjoy over and above their net salary and expatriate allowances. It is important to communicate this to the employee and to demonstrate that as long as the Cost of Living in the host location is lower than in the home location, and the negative index is not applied, the expatriate will always be enjoying a financial advantage.

United Kingdom

In the UK, the VAT increased on 1 January 2010 from 15% to 17.5%. As a consequence, the price movement of the Mercer basket for cities covered in the UK ranged between 2.5% and 4.5% inflation for 12 months.


Residential rental prices decreased from March 2009 to September 2009 as a consequence of falling demand for rental accommodation in London. As it became difficult to sell properties, homeowners were trying to let unsold houses. This caused a rise in the supply of accommodation available, and landlords had to reduce rents to be competitive. Prices stabilized in late 2009 as demand rose again at the end of 2009. Residential rental prices have been increasing in 2010 due to the economy recovery in London. This can largely be attributed to a strong demand for rentals.

Athens, Greece

Residential rental rates have been decreasing over the past six months due to the financial downturn in Greece.


Currently there is a quite good choice of accommodation on the market as the supply has increased. Accordingly, tenants are more often able to negotiate their rents.

Brussels, Belgium

Rental prices continued to increase over the first six months (March 2009 to September 2009) in Brussels, since demand remains high. High demand is the result of the credit crisis: Many people are not able to buy houses anymore and are forced to rent accommodation. Rental prices have been quite stable since autumn 2009. The rental market in Brussels is quite healthy, with constant demand for rental accommodation.

Copenhagen, Denmark

The Danish property market has been influenced by the economic downturn, and residential rental prices continued to decrease over the past year. Rising supply is the main reason for more competitive rental prices. Currently tenants have a wide choice of rental accommodation and have the opportunity to negotiate rents and decrease rates.

Paris, France

Because of strong demand, rents have been picking up again during the beginning of 2010 and are almost back to levels seen at the beginning of 2009.

Milan, Italy

Rental prices continued to decrease in Milan over the past year, influenced by the economic downturn. Currently some recovery in the market can be observed and prices are expected to stabilize in 2010.

Oslo, Norway

As the lease market in Oslo is quite healthy and demand is still strong, property rentals have been quite stable over the past six months, even increasing slightly.

Madrid, Spain

Residential rental prices in Madrid appear to be stabilizing. Over the past six months the market have been showing smaller decreases than during the past two years as a consequence of the general economic slowdown and the decrease of sales prices.

Almaty, Kazakhstan

The rental housing market has been influenced by the global economic downturn, and since 2009 rental rates have been declining due to the decreased demand as the number of expatriates coming to the city decreased significantly.


In the coming months, some stabilization is expected on the real estate market as the economy seems to be recovering.

Warsaw, Poland

The real estate market in Poland is recovering after the downturn. Residential sales prices have already started to increase; rental markets have noticed some fluctuation downward but prices are expected to increase in the coming months.

Moscow, Russia

There has been some high activity on the rental market in Moscow during the past months. Landlords are getting back to high rental rates, although demand has not recovered yet from the financial crisis that resulted in lower demand for accommodation and a decline in rental prices.

Istanbul, Turkey

Residential rentals are quite stable in Turkey, even showing some increases as demand is rising slightly. There have been some strong investments in Istanbul over the past years that resulted in rental price increases, particularly in residential districts.

Kiev, Ukraine

In Kiev the lower demand has caused an increasing supply of available accommodation for rent; residential rental prices are stable, with some slight decreases.


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Cost of living 2010

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