Data Points Q.2 2018

A Selection of Airinc Survey Results

The results are in!

This quarter’s cost of living surveys were conducted primarily in Europe, Asia, and mainland Southeast Asia

Housing Update

Snapshots of expatriate-quality rental markets around the world

Budapest, Hungary

The cost of expatriate-quality rentals increased over the past six to twelve months. Demand is up, thanks to more expatriate arrivals, particularly in the growing IT sector. Meanwhile, availability has fallen, with many apartments and houses being converted to lucrative short-term vacation rentals. A source also mentioned that many movies are being produced in the area, raising rental demand from film crews.

Milan, Italy

Milan’s rental market is booming, and rents in the city center have increased slightly. Porta Nuova, a redesigned residential area with skyscrapers and modern architecture, is fashionable, expensive, and very popular. Rentals in Porta Nuova, including the award-winning Bosco Verticale, are modern and of high quality, a combination that can be rare in Milan. Availability is tight in other neighborhoods. One- and two-bedroom apartments rent very quickly, often in one day. Availability of three- and four-bedroom apartments is also very limited in some central areas.

Stavanger, Norway

With dropping oil prices, rents decreased over the past few years and some businesses went bankrupt. In the past six months, however, demand for rentals increased as the economy stabilized with rising oil prices. Thanks to stronger demand, the vacancy rate is down.

Lisbon, Portugal

Lisbon rents are up due to several factors. There is more interest in Lisbon on the part of large international companies, and expatriate demand for rentals has increased. More houses are being listed on the sales market, removing stock from the rental market.

Geneva, Switzerland

Rents in Geneva have come down over the past few years. While apartment rents have been more stable over the past year, rents for houses have continued to drop. Slightly fewer expatriates are coming to Geneva on assignment. Supply and demand are balanced, since there is both more supply and more demand for smaller apartments, and less supply and less demand for houses.

Aberdeen, U.K.

After a long decline in rents, the bottom of the rental market has finally been reached and Aberdeen rents have been stable over the past six months. The market is starting to pick up with an increase in oil and gas activity, although it will probably be some time before rents increase again. Supply is greater at the lower end of the market.

Goods and Services Update

Highlights from our in-depth on-site surveys

Venezuela

On March 22, President Maduro announced the redenomination of the bolivar fuerte (VEF) effective June 4. The new currency would be known as the bolivar soberano (VES) and would be one thousand times stronger than the VEF. On May 29, amid concerns over preparedness for the switch, Maduro announced that the redenomination would be postponed for sixty days. The redenomination of the VEF is now scheduled to take effect on August 4. The impact of the change on inflation, if any, remains to be seen. However, many critics argue that the measure is merely a superficial fix that will do nothing to address the sources of hyperinflation.

While the DICOM rate has continued to depreciate to its current value of 120,000 VEF to the USD, the black market rate continues to depreciate at a much faster rate (currently 3,500,000 to the dollar after passing 1,000,000 to the dollar on May 30). This rapid depreciation of the black market rate coincides with rising hyperinflation and continued shortages of many items.

Geneva, Switzerland

Best known for its banking sector and the numerous international organizations headquartered there, Geneva is also regularly cited as one of the most expensive cities in the world. Expatriates moving to Geneva may experience some sticker shock during their first days as they purchase groceries, furniture, meals out, and other everyday items. One way in which residents have stretched their money is to shop across the border in France, where prices have often been cheaper. In the past year, however, this tactic has become less attractive as the Swiss Franc’s value has dropped in comparison to the Euro. While 1 Swiss Franc could buy .936 Euro in May 2017, in May 2018 that same Swiss Franc bought only .842 Euro.

Certain items may still be cheaper in France. The same table from an international furniture chain is 129 EUR (152.99 USD) in France and 169 CHF (169 USD) in Switzerland. For a shopper furnishing a whole house, it may make sense to shop in France. But for a single table, the cost and time spent on the four-hour round trip to the nearest chain store in France might not be worth it when the same chain has a store in Geneva. Either way, savvy residents will fill up their cars on the Swiss side, where petrol is cheaper. For the complicated global marketplace, AIRINC is here to advise you.

Country Tax Update

Changes in expatriate tax

Pakistan

Pakistan has enacted significant tax reform, slashing tax rates for salaried employees, with the top tax rate decreasing from 30% to 15%. The net effect is a large decrease in income tax for all salaried employees in Pakistan.

Malaysia

The Malaysian government had reduced the employee contribution rate to the Employee Provident Fund from 11% to 8% without limitation, a move aimed at stimulating consumer spending. The rate reduction was temporary, effective from March 2016 to December 2017, and the mandatory contribution rate has reverted to 11% as of January 1, 2018. In addition, the three income tax bands between MYR 20,000 and MYR 70,000 have each been reduced by 2%. The net effect of these changes is a 3% increase in social security contributions and a small decrease in income tax for all taxpayers.

Canada

For most provinces, inflation indexing has been applied to tax brackets, credits, and thresholds. The SS maximum has increased slightly. The net effect is a small increase in social security and a small decrease in tax. For British Columbia, the top provincial tax rate has increased from 14.7% to 16.8% for taxable income exceeding CAD 150,000. The net effect for BC taxpayers varies by income level, with a small decrease in tax for lower incomes and an increase in tax for higher incomes.

Kentucky, USA

Kentucky legislators overrode Governor Matt Bevin’s veto to pass a tax reform package aimed at raising revenue. The bill replaces the current six-bracket individual income tax, which has a top rate of 6%, with a single flat rate of 5%. The bill also broadens the tax base by removing most deductions, repealing the personal exemption credit, and reducing the amount of pension income excluded from income tax. There are further changes to corporate tax, sales and use tax, and cigarette tax provisions.

Selected 3 month Exchange Rate fluctuations of more than 6%

Country	Currency	Change vs EUR	Change vs USD
Venezuela	VEF	-42.1%	-45.0%
Argentina	ARS	-19.2%	-23.2%
Turkey	TRY	-12.2%	-16.6%
Brazil	BRL	-8.4%	-13.1%
Iran	IRR	-6.3%	-11.1%
Angola	AOA	-5.7%	-10.5%
South Africa	ZAR	-5.6%	-10.5%
Uruguay	UYU	-4.6%	-9.6%
Mexico	MXN	-4.2%	-9.0%
Russia	RUB	-3.8%	-8.8%
Madagascar	MGA	-2.8%	-7.7%
Hungary	HUF	-2.5%	-7.7%
Poland	PLN	-2.1%	-7.1%
Tunisia	TND	-2.0%	-6.9%
Iceland	ISK	-1.4%	-6.5%
Czech Republic	CZK	-1.2%	-6.4%
Botswana	BWP	-0.9%	-6.0%
Ghana	GHS	-0.9%	-6.0%
Sweden	SEK	-0.9%	-6.0%
Uzbekistan	UZS	8.4%	2.8%
Mozambique	MZN	11.3%	5.6%

Goods and Services Inflation

Selected surveyed locations with inflation higher than 5% for 6 months

Buenos Aires, Argentina

Caracas, Venezuela

Istanbul, Turkey

Kiev, Ukraine

Survey Location Update

Q2 Surveyed Locations and Upcoming Q3 Survey Locations

AIRINC surveys more than one 150 locations each quarter. Here are some selections.

Selected cities in Europe, Asia, and mainland Southeast Asia

Vienna, Austria
Sofia, Bulgaria
Dublin, Ireland
Rome, Italy
Astana, Kazakhstan
Hague, Netherlands
Lisbon, Portugal
St. Petersburg, Russia
Bratislava, Slovak Republic
Istanbul, Turkey
Newcastle, U.K.
Guangzhou, China
New Delhi, India
Tokyo, Japan
Hanoi, Vietnam

In response to market volatility, we also conducted survey updates in Buenos Aires and Caracas in the second quarter.

Selected cities in North America, Central and South America, the Middle East, Africa, and maritime Southeast Asia-Pacific

Anchorage AK, U.S.A.
Belize City, Belize
Rio de Janeiro, Brazil
Santiago, Chile
Bogota, Colombia
Managua, Nicaragua
Luanda, Angola
Manama, Bahrain
Cairo, Egypt
Amman, Jordan
Lagos, Nigeria
Muscat, Oman
Sydney, Australia
Manila, Philippines
Singapore

For More Information

Please contact your Client Services representative for more details and further information. For AIRLinc subscribers, please check out On-Site Insight, a weekly blog featuring location updates written by our on-site surveyors.

Services

Resources

About