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Could we see an expat reshuffle in Asia?

As Asian economies continue to reel from the impact of the COVID-19 outbreak, unemployment is expected to rise as corporates start to cut costs which is expected to greatly impact the expat community.


Economists in Singapore predict that expats in the city-state could bear the brunt, accounting for 60%, of job losses as the government’s recent COVID-19 job relief policies covered only Singaporean citizens and permanent residents. Over in Hong Kong, the situation is somewhat similar as the financial hub has not only had to grapple with volatile financial markets, which has severely impacted corporate earnings, but is also navigating the ongoing social unrest.

Doing a headcount – Singapore and Hong Kong Focusing on Singapore and Hong Kong there are currently an estimated 500,000 expats residing in the two Asian gateway cities. The following snapshots provide further details on the expat populations.


Likelihood of more expats repatriating has increased As highlighted in our recent expat sentiment survey, the COVID-19 outbreak has prompted some expats globally to begin re-evaluating their long term plans and roughly 29% are considering a permanent move back home with the main driver being the motivation to be closer to family or a support network. This mirrors HSBC’s 2018 expat survey which confirmed that around 40% of the expats in Singapore and Hong Kong have children. As economic weakness persists and unemployment starts to rise, the downturn could influence mid to senior management roles, with expats accounting for many of these positions.


What is the likely impact to Asia’s residential sector? Mounting expat repatriation will have a profound impact on the residential lettings sector, especially within the CBD and fringe CBD sub-markets. For Singapore and Hong Kong, this is likely to cancel out the rental growth gains witnessed over the past few years in areas such as Singapore’s core central region and Hong Kong’s Island.


Furthermore, quite a sizeable proportion of expats based in Singapore (26%) and Hong Kong (29%) surveyed owned their local residence. With the increased likelihood of expats looking to return home, coupled with the lack of selling hurdles in both these markets - capital gains taxes and withholding taxes - and property prices within these two markets close to historical highs; there could be supply pressure going forward especially for markets in and around the CBD area.


Not an easy decision to move While there will be an increase in expats repatriating from Asia in the coming months given the economic challenges, it is hard to ignore the opportunities they will be giving up moving back home – namely higher salaries, potentially better lifestyles, better educational infrastructure and political stability, which are enticing reasons to stay even in the long term. This perennial tug of war is something we are keen to get answers to in the coming months.


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Originally published: https://www.knightfrank.co.uk

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