All Eyes on the Index

The Economist’s “Pocket World in Figures 2008” was published last week, eagerly anticipated by property watchers all around the world. The guide, which comprehensively analyses 183 countries across 200 categories, has become the mini tome of choice for all of those interested in keeping an eye on how the world’s facts and figures shape up year after year. Not to mention finding out whose riding high in the property stakes.

Countries are ranked according to data gathered from across a wide range of areas including their geography and demographic statistics, business, economy, trade, transport, finance, industry, environment, society, culture and crime and an exhaustive profile is subsequently compiled. In addition, the Economist Intelligence Unit, which undertakes the research, features data from Mercer’s Quality of Life Index 2007, a city-to-city comparison which uses New York city as its base and 39 factors to ascertain a city’s ranking position. Data which is subsequently translated by multinational corporations into hardship allowances for inclusion into their expatriate workers compensation packages. At the start of the summer the human resorces consultancy released its Mercer Worldwide Annual Cost of Living Survey which ranked 143 of the globes most expensive cities. Research also featured in the guide comes from the world renowned UN Development Programme’s Human Development Index (HDI), a listing which surveys the correlations between 3 important indicators - personal income, adult literacy and life expectancy - in order to glean a fairly accurate ‘guesstimate’ of a more specific, all-important ‘quality-of-life’ score. Countries in the Economist’s pocket-sized almanac are scaled from 0 to 100; countries scoring over 80 are thought to have high human development, 50 to 79 medium and those under 50 low.

A favourite amongst the pub quiz crowd, this publication is also taken very seriously indeed by those with an eye on starting or maintaining well-informed international property portfolios. Most usefully, you can find a comprehensive list of property price movement (highest in South Africa, up sharpest Ireland and the UK), and also features profiles of more than 65 of the world’s major economies whilst cutting through the rose tinted promotional faff to give a clear breakdown of each country as a total package, putting a high GDP into context when placed against an overall low quality of life score (UK, joint 17th). Unsurprisingly, the Scandinavians led the way this year, with Norway coming top of the heap (HDI score of 96.5, GDP per head of $64,240), followed by Iceland and Australia, while Africa dominates the bottom of the list.

Property investors seeking a future punt should keep an eye on the worlds fastest growing cities, a list dominated by African cities including holiday resorts such as Kenya’s Mombasa. Interestingly , America’s Cup Host Valencia sits in 4th position alongside Venezuela whilst the Bulgarian capital of Sofia ranks 3rd on the slow list notably with Polish property hotspot Lodz coming in 13th. FDI is also a major contributory factor as noted in our recent reports on Bratislava and Budapest both of which are benefiting from strong FDI flows. The UK however continues to garner the attention of the worlds international investors, attributed to fairly low corporate tax and a favourable business environment. Of all the international property hotspots on the market today only Brazil, Bermuda and the UAE rank highly alongside established western world counterparts as countries attracting significant levels of FDI.

The list also makes for some rather sobering outlook. Britain for example may have the fifth biggest economy in the world, after the United States, Japan, Germany and China, but lies in joint 17th place with Italy, in the quality stakes only one place ahead of Spain,  grim reading for those hoping to jet off to a relaxing life in the sun. The provision of top rated quality of life obviously comes at a high price reflected in Norway where the cost of living is highest but a pattern does emerge with socialist France ranking high followed by Denmark, with the life in the UK ringing the tills in 4th position. So if you want your money to go further, head to the retirement havens of South America it seems as Costa Rica, Paraguay, Uraguay to name just a few sit next to the likes of India, Egypt and Bulgaria.

It is clear from this guide that the selection process for the best place to live in the world can be swayed by numerous factors given that Hungary has the dubious honour of coming in 3rd in the deaths from cancer category but, on the up side, Hong Kong, Peru and Morocco are the most energy efficient. The Economist Pocket World in Figures 2008 is a snapshot of our worlds varying societies habits, a world in which Germans, Americans and Brits spend the most while on holiday, but where France, Spain and the US were the lucky recipients of all that cash with Turkey barging its way into the top ten for highest tourist receipts, coming in 8th and letting you know that Australians drink the most alcohol whilst Greeks smoke the most cigarettes. I wonder how these nuances would be reflected on a quality of life index?

The guide even includes the definitive world ranking indice, including an update of the Economist’s so-called “Big Mac” index, which attempts to reflect purchasing power by the cost of a McDonald’s burger. The cheapest is in China at $1,41, while the most expensive Big Mac in the world is to be found in Iceland, at nearly $7,50.

Ultimately, whatever your criterion for defining THE place for you, the fact remains that quality of life or living however you may define it, remains a subjective entity influenced by a host of factors tangible but more pertinently intangible. So,  whilst Norway may officially offer the highest quality of life, for me personally, its distinct lack of sunshine is a hugely negative factor in my eyes when it comes to the sunshine stakes, whilst others may place a greater priority on a country which ranks higher for business creativity, innovation, somewhere that offers them the lowest drain on their brain ( yes someone has measured that!) or for McDonalds aficionados, simply the cheapest place to get their hands on that all important Big Mac!

‘Quality of Life’ like beauty, is most definitely in the eye of the beholder, wouldn’t you agree?