Keeping Expatriates Informed...

 

 

 

In August, we devoted the newsletter to the credit crunch 'one year on' and the effects that this is having on expatriates. Since then, the financial crisis has deepened; primarily due to increased fears that a worldwide recession is upon us.

   

In the past weeks, we have seen the first signs that the Gulf region will not escape unscathed with the stock markets plummeting, Central Banks investing millions of Dollars and lending terms tightened dramatically. There are also reports than many projects in the region are having major problems re-negotiating financing terms.

  

So, two months on, are we still ‘weathering the storm’ better than those onshore? Do expatriates in the region still feel more secure in their jobs than those elsewhere in the world?

 

Best regards,

  

Managing Director

Candour Consultancy 

  

 

  

 

Employment...

  

  

Whilst the threat of redundancies hangs over many staff in Europe and North America, most expatriates in the Middle East and Asia do not seem to have such fears.

 

Indeed, with the Middle East continuing to boom despite the credit crunch, many companies are relocating or expanding in the Middle East whilst they investigate cost cutting elsewhere.

  

Consequently, there is a greater feeling of job security amongst expatriates which, combined with feeling of being financially better off, means that there is more confidence in the expatriate marketplace than in many onshore jurisdictions.

  

However, should the economical slowdown take hold, it is inevitable that at the very least expansion plans will be put on hold. 

 

Click here to contact Candour Consultancy

 

 

Saving & Investments...

 

 

As a result of the credit crunch, banks around the world have been desperate for liquid cash. Consequently, many banks have been offering very attractive rates making it a great time for savers.

  

Onshore, banks are offering interest rates of up to 7% but this often has stipulations attached such as: only for the first 6 months then 5% thereafter, the account must be held for at least 18 months, or a substantial minimum deposit must be made. Also, this interest is taxed at source meaning that the saver only really receives 5.6% at best.

   

Offshore, the banks are also offering high interest rates but without the stipulations. Often, there is no minimum savings term, no enhanced ‘headline rate’ and minimum deposits as low as US$ 5,000.

  

Allied Irish Offshore have had their savings guaranteed by the Irish Government. Their current accounts offer debit cards and cheque books without the charges.

 

Anglo Irish Bank (who regular readers of the newsletter will know Candour Consultancy often recommend) cleaned up at the Best Offshore Bank awards again in 2008 with tax-free interest rates of up to 7.20% for their notice and fixed interest accounts.

 

Again, all savings held with the bank are guaranteed by the Irish Government and the bank has recently had its' credit rating upgraded.

 

With regards to investments, there is no denying that this has been a bad year for all; with all asset classes and all markets being affected. This is the case regardless of whether the investor lives onshore or offshore.

 

However, whilst ‘belt tightening’ may be occurring onshore, the superior disposable income of many expatriates is allowing them to take advantage of the volatility in the markets by investing additional money whilst the markets are low. Warren Buffett once said 'profit from folly, do not participate in it' - this is something we agree with and now is the time to increase savings and investments where possible; not to reduce contributions or surrender policies because they have temporarily fallen in value.

 

Candour Consultancy advise on all the major offshore savings and investment plans - many of whom are offering enhanced terms to new policyholders and those topping up their existing policies. We also have a range of articles and factsheets on the benefits of investing in volatile markets which we would be happy to forward to those they are of interest to. Just click here to request these.

 

With regard to pensions, it is a mixed bag of news; those saving on a regular basis towards their retirement should not worry too much as, whilst the value of their savings has temporarily dropped, they are buying new investment units at low prices which will boost their pension plan when the markets recover.

  

The news is not so bright for those with frozen pensions in their home country; in the UK (for example) it has recently been announced that the pension schemes of the FTSE 100 companies are back in the red - sparking fears of a new pension crisis. However, with the credit crunch having global implications, it will not just be the UK and US who are affected this time.

 

As a result, many expatriates are deciding to take advantage of QROPS and move their onshore pensions offshore; allowing them to hold the benefits in cash in troubled markets and reinvest when they feel the time is right. QROPS also have huge tax benefits, mitigate the need to purchase annuities, and ensure the benefits pass to the Members family should they die.

 

Again, Candour Consultancy advise on all the major offshore pension and QROPS providers and would be happy to provide you with more information on these products.

Click here to contact Candour Consultancy

 

 

Property & Mortgages...

 

  

The value of property in North America and Europe has fallen substantially and continues to do so. With job confidence low in these regions and draconian lending conditions, this presents great buying opportunities for expatriates considering buying in these countries.

 

Meanwhile, the property market in the Middle East continues to rise with huge gains seen in the first half of 2008.

 

One of the main impacts of the credit crunch is the lack of funds available for mortgage borrowing. This is making it hard for anyone to obtain mortgage finance onshore; and resulting in larger deposits and higher interest rates.

  

With the increased caution banks have always shown towards expatriates, there is almost a ‘mortgage famine’ (as International Mortgage Plans put it) for expatriates looking to buy onshore. However, finance is available and Candour Consultancy work closely with all the lenders still prepared to consider expatriates for mortgage finance.

 

The UAE has also seen a tightening of lending conditions in recent weeks with many lenders reducing their maximum loan amounts to 50% or 60% of the property value. Given the price of property in the UAE, this will make the down-payment too large for many who are looking to buy and may reduce demand or redirect demand to the Northern Emirates where property prices are substantially cheaper. 

  

However, higher loan-to-values can still be obtained on some developments. Candour Consultancy works closely with all the major lenders in the UAE mortgage marketplace. Our mortgage professionals can establish which mortgage is the best value for each individual and guide buyers safely through the mortgage minefield. We can also advise on maximum loan amounts based on an individuals salary and the down-payment available; which will enable buyer to focus on developments where they can obtain finance.

 

Click here to contact Candour Consultancy

Candour Consultancy has built a reputation as one of the leading independent financial and insurance consultants to both the corporate and individual sectors. As impartial offshore advisers, Candour provides complete financial planning and wealth management solutions based on the personal nature of our service and our extensive knowledge of the offshore market.

 

Whilst the primary goal of our newsletter is to introduce you to the services Candour has to offer, we'd prefer to put you in the picture even if you do not wish to do business with us. As such, the newsletter will link you to a wide range of articles offering sound advice on all aspects of offshore finance and your tax liabilities as an expatriate. Please feel free to view these articles at your leisure without obligation.

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