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Expat Focus Financial Update December 2017

Expat Pensioners Suffer Brexit Blow

Most UK expat pensioners are now having to live off an income that is worth 20% less than it was in the Christmas before the Brexit referendum. The findings come from Equiniti, which handles pension payments for more than 60,000 expat pensioners, most of whom are receiving their pensions in the Eurozone.With market uncertainty and Brexit woes, these expat pensioners have seen the value of their income dropping by 3% over the past 12 months. That’s in addition to the 17% fall in the year following the referendum to make up a 20% overall reduction headache. And with Eurozone inflation running at 1.5%, expat pensioners are beginning to feel the pinch.

Equiniti says it’s not just British expats in the Eurozone struggling since expat retirees in other parts of the world have also seen the pound’s slide affect them with those in the US worse off by 10%, while in New Zealand, Australia and Canada British expats are 14% worse off. Expat pensioner incomes have also fallen in South Africa by 15% and in Jamaica by 4%.

Equiniti’s operations director, Andy Brown, said: “Expat pensioners are at the behest of the currency exchange rollercoaster and anyone hoping to retire overseas will have had their plans derailed by currency fluctuations and the Brexit vote.”

He added that British pensioners heading overseas for retirement should appreciate the impact of any currency exchange rate movements on their budgeting and he urged them to shop around to find the best currency rates and transaction costs.

Cheapest Countries For Expats Revealed

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Researchers have revealed that the UK is now one of Europe’s cheapest countries for visitors and expats alike as the cost of living continues to fall. However, countries in Asia are dominating the top half of the most expensive countries for expats live in.

The findings from ECA International are revealed in its latest global cost of living index which shows that London is now the 139th most expensive city in the world – that is a fall of 36 places over the last year. The capital is now behind Athens, Rio and Dublin. It is also behind Harare, the capital of Zimbabwe, which is in 133rd place.

The survey takes into account the cost for consumer services and goods on a like-for-like basis in 470 locations round the world. The aim is to ensure that an expat’s spending power is maintained when they are working on an international assignment.

The top 10 most expensive cities are the Swiss cities of Zurich in third place, followed by Geneva, Basel and Bern. The survey highlights that Eurozone cities have leapt up the rankings with Eindhoven soaring 50 places, Hamburg has risen 23 places and Luxembourg City by 22 places.

The top 10 for cost of living sees the first position taken by Luanda – up from last year’s second spot – and in second place is Khartoum, a steep rise from last year’s 21st position. After the Swiss cities, Oslo is in seventh place, followed by Tokyo, Hong Kong and Norway’s Stavanger.

A spokesman for ECA International said: “It is hard to see the Swiss cities leaving the top 10 anytime soon but it’s been a remarkable year for European cities with growth exceeding expectations. Many European cities have leapfrogged others with the Euro now being one of the world’s strongest currencies with currencies elsewhere weakening.”

Most Expensive Business Destination Revealed

Meanwhile, for globally mobile executives, the cost of visiting cities for business purposes around the world has been revealed in a new survey.

According to Expert Market, a price comparison service for businesses, the number one spot has been taken by New York which now outranks Tokyo and London as the most expensive for business executives.

The firm calculated from various surveys what the average daily cost of sending an employee to 200 cities for a short term assignment will be. They found it will cost an employer $549 (£409) every day to send an executive to New York, followed by San Francisco where the daily cost is $534 (£398). In third place is Austin, followed by Tokyo and Zürich.

London makes the list of top 10 most expensive destinations where the daily cost is estimated at $469 (£349), followed by Washington DC and Chicago and then the Swiss cities of Basel and Geneva making up the list. New York is expensive because of hotel prices. The cheapest major city for travelling to for business is Johannesburg in South Africa, where an employer will spend around $174 per day.

Singapore Still Most Expensive For Expats

However, the Economist Intelligence Unit has reported that the world’s most expensive city for expats is still Singapore in their latest survey – a position it has maintained for the last four years.

In second place is Hong Kong, followed by Zurich, Tokyo and Osaka. The top 10 sees Seoul, Geneva and Paris as well as New York and Copenhagen making the cut.

Property Prices In Spain Enjoy Strong Growth

Many expats who own property in Spain will be pleased to hear that in the year to September, prices there rose by 2.4% and sales increased by 8.6%. The figures published by the Association of Spanish Notaries reveal that apartment sales increased by 7.7%, with prices increasing by 8.9%. Newbuild sales dropped by 1.9%, and detached homes saw sales rise by 12%.

Property experts say that the Spanish property market is now recovering strongly after the 2008 price crash with all of the leading house price indices showing strong gains.

Among the areas with robust growth is Palma de Mallorca, but some cities are still below their peak; in Barcelona property prices are still 8.4% lower and in Madrid they are still 20.4% lower. Also, the prices in some regional cities are still 50% down, including provincial capitals such as Zaragoza and Lleida.

Meanwhile, expats are seeing rents for Spanish homes rising with one government minister saying that rents were higher 10 years ago before the country’s property market crashed. However, rents in Catalonia and the Balearics are increasing more quickly than in other parts of Spain.

New Zealand Ban Has Little Impact

Estate agents in New Zealand say that the government’s plan to ban expats from buying property will have ‘little impact’. The move is a bid to help curb rising property prices, but the country’s Real Estate Institute says that just 3.8% of buyers come from abroad. Most sales – around 64% – are made to local people while 30% are from buyers living in other cities and towns in New Zealand.

The organisation’s chief executive, Bindi Norwell, said: “Since international buyers are a small part of the market we are interested to see what impact the government believes that a ban on foreign buyers will have.” She added that a similar ban in Australia has had little impact and it’s still the world’s third most unaffordable country.

The New Zealand government has clarified its position and said expats with a permanent residence visa will still be able to buy property in the country.

Brexit Brings Offshore Jobs To UK

The world’s number one financial services centre is still London despite Brexit; firms are increasingly bringing offshore operations back to the country, say researchers.

The findings from Robert Half Financial Services show that 59% of firms have increased their levels of transferring their offshore business operations back into the country, compared with 4% who said they had decreased their levels.

The reasons for this include a skills shortage overseas and a lack of efficiency in the regions where operations were moved. A spokesman for the firm said UK firms are bringing back important business operations to create centres of excellence and creating jobs and boosting careers for local and expat talent.

House Prices See Sluggish Growth Worldwide

For expats who have bought houses around the world, research from real estate firm Knight Frank reveals that in the year to September, prices rose by 5.1% in the third quarter globally. That’s a fall from the second quarter’s figure of 6.3% and it’s the lowest rate of growth recorded since the beginning of 2016.

The firm’s global house price index reveals that property prices have risen in 88% of the countries that are tracked.

Topping the index is Iceland with price growth in the third quarter of 20.4%, down from 23.2% in the previous quarter. In second place is Hong Kong with annual price rises of 17.5%, then the Czech Republic with increases of 13.2% and Malta where property prices rose by 11.5%.

A spokeswoman for Knight Frank said that despite prices recovering in Europe, the best performers are still in countries within the Asia-Pacific region.

Failure To Pay Bills Sees Expats Banned From Travel

The Ministry of Justice in Kuwait has revealed that growing numbers of expats, as well as Kuwaitis, are failing to pay their bills, including for their telephone service, which is leading to growing numbers being banned from travelling.

According to the ministry, in the first nine months of this year, 141,500 people were barred from leaving the country. Now expats are being urged to check the ministry’s website to ensure there is no travel ban imposed upon them. They point out that officials can lift the ban at exit ports if the expat has been banned for failing to pay their bills.

Expats Warned About Financial Adviser Credentials

Consumer advice magazine Which? Money is warning expats to check that their financial adviser has authentic credentials after finding many financial advisers on Unbiased.co.uk have false ones.

The researchers found that 63% of firms did not employ a qualified financial adviser. The magazine’s findings has prompted the Chartered Institute of Securities and Investment (Cisi) to issue a warning that advertisers who are publishing false credentials in paid-for online listings will be subject to legal or disciplinary action.

In Other Financial News

Research from financial services firm Hargreaves Lansdown has revealed that 36% of employees in the UK believe that a workplace pension is the top employee benefit they can enjoy. Their research also reveals that 15% place private medical insurance as being the most valuable, while 12% wanted extra holiday entitlement.

After American politicians voted through President Donald Trump’s tax reform bill, various US expat groups say they will still continue fighting to bring an end to the system that sees American expats paying their taxes to the Internal Revenue Services (IRS). The groups say there is still no reference to changing the future system under the current tax reforms for US expats.

The European Commission has announced that it is looking into residential visa schemes for rich foreign investors with a view to imposing tougher restrictions. The schemes, sometimes called ‘golden visa’ schemes, enable non-EU investors to take up residency visas and have grown in popularity, particularly in countries like Portugal.

HSBC Expat picked up two awards at this year’s Forum for Expatriate Management event to celebrate expat mobility. It’s the fifth year running that the firm has been recognised for its cross border services and offshore banking solutions for expats and others living overseas.

Singapore has announced that school fees for international students and permanent residents attending government schools will increase. Over the next three years, the Ministry of Education says school fees will increase by 35% – though most expats in Singapore send their children to international schools which are unaffected by the decision. Fees will increase from $600 (£332/$445) and rise to $950 (£525/$705) for international students at secondary school. Permanent residents will pay $380 (£210/$282) per month.

The Central Bank of Sudan has told banks in the country receiving Sudanese expat remittances that have been made overseas to hand over the money in the same currency as it was transferred in. One reason for the move is thought to be the downward spiral of the Sudanese Pound, though the bank says it is looking to provide the best banking service for Sudanese expats working overseas.