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Expat packages on the decline

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  1. #1

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    Expat packages on the decline

    Article in Bloomberg.




    In the first quarter of this year, only 7 percent of Jones Lang LaSalle Inc.’s expat real estate clients in Hong Kong were given monthly rental budgets of more than HK$100,000, down from 31 percent in 2012. Now, 54 percent of clients make do with less than HK$30,000 a month―enough for about two small bedrooms squished into 550 square feet in Central district―compared with 11 percent four years ago.

    So Long, Fat Expat Packages. Fewer Bankers in Hong Kong Get Them Now - Bloomberg
    Fiona in HKG likes this.

  2. #2

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    “We are seeing more downsizing,” said Maureen Mills, managing director of Executive Homes Hong Kong Ltd., a boutique real estate agency that works with law firms. “Partners used to have company leases and were happy to spend HK$150,000. Now with cash packages they are more comfortable at HK$80,000 to HK$100,000.”

    Oh the horror of it all....how will they survive on the 100-80K allowances

    In all seriousness, as much as this article gives me pleasure, it can't be good for the overall economy in Hong Kong. That's a lot less money slushing around town.


  3. #3

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    I was always of the opinion, give the cash to the staff. They will spend less when they know it is cash out of their own pockets. But once the company provides housing it gets hidden, and co has to bear administrative burden as well servicing the rental payments.

    shri likes this.

  4. #4

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    Quote Originally Posted by threelittlepigs:
    I was always of the opinion, give the cash to the staff. They will spend less when they know it is cash out of their own pockets. But once the company provides housing it gets hidden, and co has to bear administrative burden as well servicing the rental payments.
    I agree with that. Except the staff sometimes prefer the housing allowance for the tax benefit.
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  5. #5

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    Quote Originally Posted by threelittlepigs:
    I was always of the opinion, give the cash to the staff. They will spend less when they know it is cash out of their own pockets. But once the company provides housing it gets hidden, and co has to bear administrative burden as well servicing the rental payments.
    I'm wondering if there are tax reasons for giving a housing allowance versus a salary? Or else to make sure they don't have to maintain that salary if the employee transfers home. I.E. If you make US$100K and they add US$100K as a housing allowance while you're in HK, when you go home you aren't going to be on a US$200K salary.

  6. #6

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    You can still compensate without giving housing allowances and ensuring that globally mobile professionals get compensated appropriately with COLA (cost of living allowances).

    https://en.wikipedia.org/wiki/Cost_o...ent_.28COLA.29


  7. #7

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    Quote Originally Posted by Open Casket:
    Except the staff sometimes prefer the housing allowance for the tax benefit.
    Isn't the housing allowance taxed just like a salary?
    Doesn't the IRD specifically ask for an amount on housing allowance in their tax forms?

  8. #8

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    Quote Originally Posted by Open Casket:
    I agree with that. Except the staff sometimes prefer the housing allowance for the tax benefit.
    Of course the staff prefers a package. They don't have to worry about signing rental contracts. They don't have to provide documents and bother with rental payments every month. They don't even have to engage an agent as someone from the employer will help with this. When things go wrong the company is the one that calls the landlord to fix things, etc.

    But there is a cost to this "service" and as someone in management, this is the first place I would cut costs. People in other parts of the world have to find their own living arrangements as there are no packages so why is HK any different. This is no longer a hardship posting.

    The cold hard reality is, if you don't want to take a local package then take a redundancy package. That is what we are telling people at my shop that still don't get it.
    shri likes this.