Q.3 2021

Data Points

A Selection of AIRINC Research Results

This quarter’s cost of living research was conducted primarily in North America, Central and South America, the Middle East, Africa, and maritime Southeast Asia-Pacific.

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Housing Update

Snapshots of expatriate-quality rental markets around the world

United States

San Francisco CA, U.S.A.

Calgary AB, Canada

Argentina

Guatemala City, Guatemala

Doha, Qatar

Dubai, U.A.E.

United States

AIRINC continues to see significant movement within U.S. rental markets. Home sale prices soared in the last year as a new generation moved out of cities to compete for a finite supply of houses. Some potential buyers were priced out and returned to the rental market, some consolidated households transitioned back to single-family living, and urban centers are recovering amid an uneven reopening this summer. After a dip last year, big cities are returning to or exceeding pre-pandemic rents while movement within the country has also driven up traditionally low-cost rental areas. News reports confirm a historic increase in tenants and dramatic rent increases in some markets for both apartments and houses.

San Francisco CA, U.S.A.

San Francisco has not yet returned to its pre-pandemic heights, but rents increased since the beginning of this year with recovering demand. Some company’s workers returned to work in a physical office in the city. Even among those who are continuing to work from home, some simply prefer city life and have returned due to preference. There is more movement overall and sources expect rents to continue rising in the fall.

Calgary AB, Canada

Rental rates for houses increased over the past year while apartment and townhouse rents remained relatively stable. The sales market accelerated, and many landlords took the opportunity to sell their properties, reducing the number of houses available for rent. Demand reduced for apartments in the city center where restrictions limited the appeal of urban amenities. Still, sources are optimistic about the future as Calgary’s economy continues to diversify and bring in new people.

Argentina

A new rent law passed in 2020. Among its changes: the minimum lease length increased from 2 to 3 years, rent values will be increased every year rather than every six months during a lease, and increases will be tied to CPI and a salary index. The law also clarified limits for security deposits, rent paid in advance, and cost responsibility of condo fees and taxes. For one, tenants are no longer responsible for ABL, a municipal tax used to finance street lighting, garbage collection, and cleaning services for the city. By law, this must now be paid by the landlord. Partly due to the rent law, some rents increased as landlords try to recoup their expenses.

Guatemala City, Guatemala

The pandemic raised the demand for houses and apartments with green space or balconies. As vaccination increases, there is more movement in the rental market. Zones 14 and 16 remain the most popular areas for expatriate housing. New apartments are being built throughout the city and demand is expected to increase as more expatriates arrive in Guatemala.

Doha, Qatar

The rental market in Doha is recovering from a dip in 2020 as Qatar welcomes back fully vaccinated travelers. Tenants became more focused on value in the past year and are increasingly insistent about including other costs in rent, such as utility bills. Furnishing and fitting standards are also increasing to attract and retain renters. Doha’s hosting of the World Cup next year is keeping sources optimistic that things will continue to improve.

Dubai, U.A.E.

Villa rents in Dubai began surging during the pandemic. At first, renters prioritized properties with ample green space and proximity to the sea, but now many renters have expanded their search to other areas of the city due to limited availability. Demand for these villas is high and expected to remain high without much change in supply as the most popular areas are already built up. Apartment rents have been more volatile since early 2020, dropping in some areas and stabilizing more recently. The World Expo, which will be hosted in the United Arab Emirates from October 2021 to March 2022, is not expected to have a large effect on long-term expatriate housing rents.

Goods and Services Update

Highlights from AIRINC’s in-depth research
Singapore’s Rising Car Prices
El Salvador Adopts Bitcoin as Legal Tender

Singapore’s Rising Car Prices

Singapore is one of the most expensive places in the world to purchase a vehicle because of the Certificate of Entitlement (COE). The COE is required for purchasing a car and allows for ownership over a period of ten years. Singapore uses a Vehicle Quota System (VQS) to determine the number of COEs made available to the public. The VQS uses several factors to determine the quota, including the number of vehicles removed from the road, allowable growth, expiration of existing COEs, vehicle type, etc.

This system allows Singapore to strictly control the number of vehicles on the road, to avoid overburdening its infrastructure, and to keep traffic in check. When COEs are made available, they are then bid upon, with the bids determining the final price. When demand is high, the price of a COE can be very high, often exceeding the value of the car itself. Because of the unpredictability of the process, the total purchase price of a car can be highly variable.

AIRINC saw increasing purchase price of cars in Singapore, mainly because of increasing COE prices. Parts of 2019 and 2020 saw some of the lowest COE prices in the past decade; however, prices have been increasing since late 2020. For example, a COE for a category A car (up to 1600 cc) cost 38,504 SGD on September 23rd, 2020, but 48,000 SGD today, an increase of roughly 25%.

Factors that impact supply and demand play a role in this increase, including a temporary change to vehicle emissions surcharges, which increased demand for many low emission cars, and a recent decrease to the quota of COEs made available.

El Salvador Adopts Bitcoin as Legal Tender

El Salvador officially recognized the cryptocurrency bitcoin as legal tender as of early September. The government made an initial purchase of 550 bitcoins (worth approximately $26 million USD at the time). This polarizing move was backed by the country’s president, Nayib Bukele, who has recently styled himself the “coolest dictator in the world” subsequent to mass demonstrations against him and his authoritarian regime.

The rollout of bitcoin as a national currency was marred by technological glitches and an immediate drop in value of 10%, highlighting the unstable nature of cryptocurrencies – one of the arguments against its widespread use. The value sunk further in September due to fears that the Chinese real estate developer Evergrande would default on its loans and result in a credit contagion – an economic crisis that spreads from one market or region to another. While the value of bitcoin has rebounded somewhat in the interim, this does emphasize its extreme volatility and vulnerability to current events. However, the government of El Salvador doubled down on its investment and purchased an additional 150 bitcoins (raising its reserve to 700) while prices were lower.

Goods and Services Inflation

Selected locations with inflation higher than 5% for 6 months
Angola
Argentina
Ghana
Nigeria
Suriname
Venezuela

Selected 3-month Exchange Rate fluctuations of more than 5%

Venezuela

Currency: VES

Change vs EUR: -21.0%

Change vs USD: -23.0%

Myanmar

Currency: MMK

Change vs EUR: -7.8%

Change vs USD: -10.0%

Afghanistan

Currency: AFN

Change vs EUR: -6.3%

Change vs USD: -8.5%

Chile

Currency: CLP

Change vs EUR: -4.8%

Change vs USD: -7.0%

Pakistan

Currency: PKR

Change vs EUR: -4.8%

Change vs USD: -7.0%

Haiti

Currency: HTG

Change vs EUR: -3.3%

Change vs USD: -5.6%

Ethiopia

Currency: ETB

Change vs EUR: -3.0%

Change vs USD: -5.3%

Thailand

Currency: THB

Change vs EUR: -2.8%

Change vs USD: -5.2%

Angola

Currency: AOA

Change vs EUR: 6.0%

Change vs USD: 3.5%

Armenia

Currency: AMD

Change vs EUR: 8.0%

Change vs USD: 5.5%

Seychelles

Currency: SCR

Change vs EUR: 22.7%

Change vs USD: 19.8%

Zambia

Currency: ZMW

Change vs EUR: 41.7%

Change vs USD: 38.2%

Country
Tax Update

Changes in expatriate tax

Armenia

Djibouti

Dominica

Poland

Suriname

For more information, please see our blog post on COVID-19 tax updates:
Learn More

Armenia

The flat tax rate was reduced from 23% to 22% and is scheduled to decrease to 20% by January 1, 2023. The Stamp Duty for all employees was AMD 12,000 per year but changed to a progressive slab schedule with a maximum annual contribution of AMD 180,000. Social security rates increased, and the maximum annual contribution increased from AMD 306,000 to AMD 834,000. The net effect is an increase in social security for all taxpayers. Income tax (including Stamp Duty) increased for lower incomes but decreased for middle and higher incomes.

Djibouti

The tax rate schedule was amended, including two new top tax rates of 35% and 40%. The net effect is a decrease in income tax at lower incomes and an increase in income tax at higher incomes.

Dominica

The social security rate increased from 6.25% to 6.5% and the maximum contribution increased from ECD 4,500 to ECD 4,680. The Dominica Social Security Regulations were amended in 2013 with scheduled increases. The social security rate increases progressively until 2031 (6.5% in 2021, 6.75% in 2022, 7% in 2023, etc.). The net effect is a small increase in social security for all taxpayers. Tax is unchanged.

Poland

The Ministry of Finance introduced a comprehensive tax reform referred to as “Polski Ład.” The reform envisages, among other things, significant changes to individual income tax and new incentives to foster innovation, promote economic growth, and attract investment, including:

  • A 50% reduction in income tax (for up to 4 consecutive years) for individuals that transfer their residence to Poland and derive employment income.
  • A preferential tax regime for qualifying high-net-worth individuals who transfer their tax residence to Poland and annually invest a minimum of PLN 100,000 in the economic growth in Poland. Under the preferential regime, the foreign-source income is subject to one-off tax of PLN 200,000 per year, regardless of the source and amount of foreign income.
  • Regulations that will facilitate remote working of employees, including the entitlement to e-working per diems.
  • A tax amnesty program for Polish nationals returning to Poland who have undeclared assets or income.

Suriname

In response to the economic crisis brought on by the COVID-19 pandemic, the Suriname government implemented a solidarity surcharge of 10% on taxable incomes exceeding SRD 150,000, effective February 1, 2021. It is expected that the solidarity surcharge will be in effect until a proposed Value Added Tax (VAT) is implemented in July 2022. This brings the top marginal tax rate from 38% to 48%. The net effect is an increase in tax for incomes exceeding SRD 150,000. Social security contribution rates are unchanged.

Research Location Update

Q.3 Researched Locations and Upcoming Q.4 Locations

AIRINC researches more than 150 locations each quarter.

Q.3 Researched Locations
Q.4 Upcoming Locations

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