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Expatriates in Japan face the highest living expenses in Asia, according to a global survey by ECA International. Tokyo remains the most expensive city both regionally and internationally.  The Japanese cities of Tokyo, Nagoya, Yokohama, and Kobe make Japan the most expensive country in the Asian region for expatriates.

Exchange rates are the primary driving force behind the cost of living increases for expatriates in Japan.  At the close of 2009, the exchange rate was 90.9 yen to the US dollar.  Since then, the US dollar has depreciated against the yen, with the exchange rate of 81.3 yen to the dollar (year-end 2010) and 77.5 yen to the dollar (year-end 2011). The appreciating yen has significantly hurt the purchasing power of expatriates paid in US dollars.

The most expensive cities in the Asian region (after Tokyo) are Seoul, Singapore, Beijing, Shanghai, and Hong Kong -- in that order.

On average, expatriates’ costs of living have risen by over 8% across Asia in 2011. This is due to strengthening of almost all of the respective local Asian currencies against the major Western currencies (such as the US dollar and Euro).  An exception to the general trend is Hong Kong, which dropped from sixth to ninth place as the most expensive in the region.  This is a result of the relative depreciation of the Hong Kong dollar, which is closely pegged to the US dollar.

While foreigners working in Asia bear relatively high living expenses, the region is still very attractive to Western companies.   This is due to the high growth rate projections in the Asian region, forecasted to be 6% and 6.5% in the next two years respectively.