Expats in Europe less well off as those in emerging economies have higher incomes, new survey shows

by Ray Clancy on September 3, 2010

Emerging economies remain home to the world’s wealthiest expats with Russia, Saudi Arabia and Bahrain the top locations for higher annual salaries, new research shows.

These three countries have more overall wealth for expats, greater levels of disposable income and more expats owning luxurious items such as swimming pools, a yacht and taking expensive holidays, the International report from HSBC reveals.

Now in its third year, the Expat Explorer survey, the largest global poll of its kind, also shows that a wealth gap is developing between the east and west with expats in emerging economies leaving those in Europe behind.

‘The BRIC, Brazil, Russia, India and China, economies have fared well over the last year and as a result we’ve seen that these expat locations are particularly strong when it comes to expat finances,’ said Lisa Wood, head of customer propositions at HSBC.

Expats in Russia remain the wealthiest in the world, with over a third, 36%, of those surveyed earning over $250,000. Both Singapore, at 32%, and Bermuda at 27%, have a much higher proportion of expats with an annual income of over $250,000, significantly higher than the world average of 13%.

Mainland Europe, however, dominates the bottom five positions on the league table.  Almost two thirds, 62% of surveyed expats living in Spain earn below $60,000, as do almost half of the expats living in France, 47%, the Netherlands, 47%, and Germany, 45%.

This is much higher than the global average of only 26% of expats who earn less than $60,000 and can largely be explained by the high number of expats who choose mainland Europe as a retirement destination.

The only other country to join mainland Europe in the bottom quartile was South Africa, where 36% of expats earn less than $60,000.

While 63% of all expats surveyed said they are earning more in their host country than in their country of origin, expats based in BRIC countries scored much higher with 69% in Brazil earning more, 82% in Russia, 70% in India and 75% in China.

In addition, with the exception of Brazil which fell slightly under the overall average, expats in BRIC countries were also more likely to see increased career opportunities within their host country.

Finances amongst expats in general remained extremely positive, with the majority of those surveyed saving more since moving abroad and very few accumulating more debt. Some 66% of expats have more disposable income in their new country and those in the defined wealth hotspots are benefiting most from the increase in their personal finances.

All expats surveyed in Bahrain said they have more disposable income than they did previously, with the numbers also extremely high in Bermuda, 96%, Qatar, 92%, and Saudi Arabia, 92%.

Expats are also still saving a greater amount whilst working abroad and 20% are able to pay off more debt than when they lived in their home country. Only 5% of expats surveyed overall are now accumulating more debt. Qatar boasts the highest number of expats being able to save more than in their home country followed by Saudi Arabia, Bahrain and Russia.

Although expats tend to use a large variety of vehicles to save and invest, a large proportion of wealth in longer term investments is repatriated, the most common being property, 30%, equity 22%, and bonds 11%. The most popular investment vehicles for expats in an offshore centre were managed funds 16%, equities 13% and foreign exchange 12%.

‘It’s fair to say that we’ve definitely seen a marked change in expat sentiment, particularly when it comes to individuals’ respective economies and their feelings on going home. Against the backdrop of global economic recovery, we are still finding a large proportion of expats who are indicating that the economic situation of their adopted country has deteriorated. Despite this, most aren’t considering a move home and better still, the majority of expats surveyed have higher levels of disposable income, are saving more and accumulating less debt,’ explained Wood.

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