Home » Expat Focus Financial Update 12 January 2017

Expat Focus Financial Update 12 January 2017

London will remain a top location for expat businesspeople

Despite Brexit, London will continue to attract expats from around the world to enjoy excellent opportunities, new research suggests.

Many critics of the vote to leave the European Union have expressed fears that London will be seen as a less attractive location for expats around the world when the UK eventually leaves the EU.However, according to real estate consultancy CBRE, this will not be the case and the population will continue to grow regardless of what happens during Brexit negotiations.

London is also the leading ‘tech city’ in Europe, with Paris and Berlin in second and third spots. It is also a global hub for the tech industry with booming employment prospects.

Their research highlights that London has enjoyed average GDP growth of 3.8% every year since 2012 which is much higher than any other European city.

As for jobs, another 6 million will be created by 2036 which will be an average growth of 3% every year.

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In addition, London is also home to the world’s biggest forex market and accounts for 41% of worldwide turnover, with half of the country’s financial services being generated in London.

A spokesman for CBR is said: “Despite the turmoil and uncertainties of the last 12 months our findings highlight that London will remain a major global city.

“It has a robust economy and a world-class offering of culture, heritage, creativity and education and will continue to attract an increasing and diverse population from every corner of the world.”

Meanwhile, it has been suggested that anyone wanting to move to the UK should learn English before they arrive or attend compulsory language classes once in the country, say MPs.

The Parliamentary group is also calling for a regionally-led immigration system, similar to the one that operates in Canada, which would see Wales, Scotland and Northern Ireland developing their own immigration policies.

The MPs say expats also need to be aware of UK laws, culture and traditions and local authorities are being urged to set up action plans for integration to take place effectively.

Expats push up Melbourne house prices

Industry watchers say that housing in Melbourne is about to overtake Sydney as the most expensive in Australia.

It’s already been voted as the world’s most liveable city for six straight years and with its population growing by 100,000 people every year, house prices are increasing rapidly.

Prices there rose by nearly 7% in the year leading up to September 2016, while Sydney’s house prices grew by just 3.2% over the same period.

With its growing reputation as a sporting and cultural mecca, many expats as well as Australians are upping sticks and moving to Melbourne.

The world's most expensive car parking revealed

Among the expenses many expats have to consider when heading overseas is car parking, and those living in New York will be footing the heftiest bill in the world.

Expats working there pay out more than $25 for one hour’s parking in parts of the Big Apple.

Central London is the next most expensive with a 60-minute stay costing £8.84 – which is more than the country’s minimum living wage for workers who are aged over 25.

In comparison, parking in Bucharest costs 55p an hour.

Indian government extends rupee note deadline

Indian expats around the world who are still struggling to change their 500 and 1,000 rupee notes have been told the deadline for doing so has been extended until June.

That will come as something of a relief, since many expats were trying to meet the December 30 deadline by exchanging money at exchanges which did not have the replacement notes in stock.

The move follows the widely-publicised chaos after the Indian government withdrew the two banknotes from circulation in an effort to tackle corruption and tax evasion.

The move led to lengthy queues at banks and exchanges, with those Indian expats working overseas struggling to find an exchange with the new notes in place.

As an alternative, Indians could also place their money in bank accounts without any limit, but the problem is that most Indians do not have bank accounts for this purpose in what is still a cash-led economy.

Saudi's new expat fees 'will be a burden'

The Chamber of Commerce and Industry in Saudi Arabia has told the government that new fees being imposed on expats and their dependents from July will create a ‘financial burden’.

This burden will also extend to their employers and create an adverse working environment in the Kingdom.

The Chamber is predicting that the new fees could generate as much as SR65 billion (£14.1bn/$17.3bn) by 2020, with critics saying the country’s real estate market could be badly hurt as expats opt to leave the country along with their family.

The government is also being warned that shops, offices and flats will be vacated and the sudden outflow of experienced expats will hurt the country and its economy.

British pound drops in value against 56 currencies

The pound made gains in 2016 with just two currencies and fell in value against 56, says Lloyds Bank.

They analysed 60 currencies in 2016 and found that the pound gained 106% against the Egyptian pound and 23% against the Mozambique metical.

However, the pound fell in value against all of the other monitored currencies and lost around a fifth of its value against nine of the world’s major currencies.

In addition to global economic uncertainty for most of the year, the biggest drops were seen after the Brexit vote.

The biggest falls were seen against the Brazilian real, down by 28%, the Russian ruble and the Icelandic krona, both down 28%.

Over the year, the pound also dropped by 17% against the US dollar to reach its lowest level since 1984.

New expat municipality fee will have an impact

A new municipality fee has been introduced in Abu Dhabi which equates to 3% of every expat’s yearly rent.

Critics say the additional cost could have a serious impact on an expat’s cost of living there.

The move covers tenancy agreements with a minimum amount payable of Dh450 (£100/$123).

According to some news outlets, this is a retrospective fee which will be charged back to February 2016, with expats who are renting having to pay a single lump sum for last year’s municipality fee immediately.

The new fee is not applicable to homeowners and UAE nationals.

A government spokesman said that the new fee should be added to tenancy contracts from this month, with the extra fee being added to the expat’s water and electricity bills to cover last year’s fee.

Failure to pay could see expats having their utilities disconnected and facing legal action.

Indian government appeals for expat investment

The Indian government has marked the start of the New Year by urging its successful expats to invest in the country.

The government says its economy has grown by 7% in each of the last two years, with lots of major business opportunities available.

However, one Indian expat based in the Middle East says the government needs to simplify its procedures and laws to enable expats to invest more easily.

The investment call was made at a major business exhibition and with more than 30 million Indian expats dotted around the world, the potential for investment is huge, the government says.

New buy to let rules will impact expats

British expats are being warned that new rules introduced by the Prudential Regulation Authority will have a major impact on the country’s buy to let lending market.

The rules will limit how much expats wanting to become property investors and landlords can get as a mortgage for their buy to let property.

The aims of the rules are to slow the market down and force buyers to put down larger deposits.

In addition, the lenders have also been told to introduce affordability tests so the expat will need to show they can pay a buy to let mortgage should interest rates rise to 5.5% and generate rental income of 145% of their mortgage repayment.

The new rules took effect on 1 January, with some expat mortgage brokers reporting a hike in activity beforehand as buyers looked to beat the deadline.

In other financial news…

News that expats in Kuwait may have to pay more for their healthcare has been denied by the government as premature since the possibility of increasing health service charges is still being ‘perused and studied’. No figures have been endorsed so far, one Ministry of Health official was quoted as saying, though media there are reporting that fees could rise by 500% for expats and more for visitors.

Expat traders are being blamed by authorities in Saudi Arabia for undermining its Saudization drive in the mobile phone industry, with many Saudi businesses in the sector saying they are being undercut by expats trading legally.

Expats working in Kuwait can now leave the country for a vacation in urgent circumstances or any other purpose after telling their recruiter or employer, says the government which has amended the law governing the exit and entry as well as residence laws for expats.

A campaign targeting Bangladeshi expats in the UAE is urging them to use legal outlets for remitting money. Those behind the campaign will be advertising on Bangladeshi social media and TV channels in the country.

Oman has announced that the minimum salary requirement of RO 600 (£1,270/$1/560) for expats who want to bring their families into the country will remain the same. One organisation had asked if the salary requirement could be reduced so more expats could bring their families to the Sultanate. The Minister’s Council said that the amount is ‘the right wage’ for bringing a family into the country.

Experts are predicting that the ‘expat exodus’ from Oman will continue through 2017 as the economic situation there tightens and salaries are reduced. Despite the small rise in the price of oil, the Sultanate is still struggling with financing infrastructure projects and representatives from the oil industry are predicting that more senior and middle level expats will leave this year.

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