Regina Real Estate | Early Repatriations, Downsizing, A Deer In ...

Early Repatriations & Downsizing
Relocation and human resources (HR) professionals are coping with a massive number of issues in managing their global expatriate staff. For many, increased pressure from their procurement departments and reduced budgets are leaving them no other choice than to persuade some of their expat employees to return home early (or worse yet, initiating forced repatriations) or transition them into early localization. Many of the assignees have children settled in schools in their host country and are reluctant to leave, or are not ready or willing to be localized, making it difficult to maintain staff motivation and morale.

?We are seeing an increase in early repatriation in Europe and many are a result of redundancy. These cases can be challenging,? noted Shan Norman from London. Warwick Anderson from Australia added, ?the bottom line here in Australia is that companies have placed freezes on the majority of middle and senior management movement.?

In France, a number of companies are downsizing which is causing a rise in unemployment and consumer confidence. Michel Van Riel from Paris, shared some positive insights: ?Some banks are planning a return to France of their expatriates mainly from the U.S., and we have received positive signals from several clients that the number of expatriates relocating will not be affected by the present economic climate.?

Comparing January and February 2009 with the same two months of 2008, Crown saw a 27% increase in the number of people moving to the United States and Canada, suggesting an increase of repatriations. In New York, Bob Leotti commented, ?I?ve seen changes in corporate relocation departments such as expats being sent back home or a reduction in the relocation department itself, especially in the financial sector.?

Las Vegas has been one of the hardest hit economies in the United States. Scott Lax explains, ?over the last 10 years, new construction accounted for about 30% of the Las Vegas economy. Many of these investments have been put on hold indefinitely and the associated jobs have also been put on hold?or disappeared completely. With the industry under so much stress, many people are moving away from Las Vegas.? Bill Whaley from San Francisco added, ?the job losses have been greater than anticipated with multinationals going through major staff reductions since October of last year.?

Relocation professionals in the United States as a whole are also coping with unprecedented domestic relocation issues. The mortgage crisis is making it difficult for employees to sell their homes. In fact, some of them are in a negative equity position (when they owe more on their mortgage than their home is worth). For employees that are unable to sell their homes, corporate clients are implementing creative solutions in their efforts to relocate employees who are needed to fill important roles throughout the country. Home selling strategies, temporary housing benefits and special monetary concessions are just a few of the strategies being employed by relocation professionals managing domestic mobility programs in the United States.


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Economic Impact on Southeast Asia
According to Andrew Soon, ?in Singapore, redundancies nearly tripled from 3,180 in the third quarter of last year to a record quarterly high of 9,410 workers in the fourth quarter as the global economic downturn worsened. As a result, Singapore has unveiled a raft of recovery schemes in efforts to boost the economy.?

?So far I haven?t seen a large impact in Malaysia, but of course there are some people going home. Some corporate projects have been put on hold but existing projects are continuing. Malaysia has become an attractive location for many corporations looking to set up their Asia regional headquarters which has softened the impact of the global economic conditions.? noted Ronan Kelly from Kuala Lumpur.

The Philippines has not experienced a definitive increase in outbound moves, but is starting to see an outflow of mid level managers. According to Camilla Brooks, ?the industries most affected are construction and banking. Despite the significant growth of Business Process Outsourcing (BPOs) in the Philippines in the past few years, there are some signs of a slowdown in their growth. Although it?s unclear, this slowdown is likely to be short-term as companies will continue to be attracted to the cost-saving opportunities from BPOs.

Leon Hulme from Seoul gave his insights on the economic impact in Korea. ?The Korean Won (KRW) is one of the worst performing currencies in Asia, being as much of a concern in Korea as the global financial crisis is.? Many Koreans and Korean Americans are returning home to provide financial support to their families who are impacted by the weak local currency and unable to make ends meet.?

Some BRIC Countries Remain Strong
Regina Mattos from Sao Paulo believes that the Brazilian relocation companies are prospering from this world economic crisis. ?Brazilian banks have been very strict about making loans which prevented a real estate boom, and corresponding bubble, as was seen in the United States. People moving to Brazil are still on the rise, natural resources are plentiful and foreign investments have continued to flow.?

Moscow has not fared as well. Russia has been experiencing an almost 40% collapse of the local Ruble currency in the past year, which has accelerated the already high inflation rate. Crown has seen an increase in expats moving out of Moscow over the past few months compared to the same period last year and there is an overall slowdown in expats making Moscow their new home. While the expectation is that this slowdown will continue in the short-term, the growth of the Eastern European region in the past years, along with the country?s natural resources create a sense of optimism in regard to the country, and region?s long-term growth.

In India, Crown saw a 31% increase in outbound moves with a downward trend primarily in the banking and construction industries. Many of the approximate 1,000 expats in Bangalore are being asked to leave. The hotels that provide long-term accommodations for expats are seeing more and more expats leaving the city. But there has been stability and some growth in the hospitality, pharmaceutical and telecommunications industries. Crown?s team in India is optimistic about India?s highly developed BPOs and banking industries. Many have adapted a ?wait and see? approach to the global economic situation.

China is seeing an interesting trend in expats who have lost their jobs, and rather than return to their home country, are opting to stay in China and find another employer. Gary French from Hong Kong commented, ?over the last few months we have seen an increase in the number of outbound moves, but we have also seen a significant increase in the number of people that are choosing to pack and move to lower-cost housing or to other Asian cities, while keeping their personal effects in short-term storage.

?We believe this is a result of people wanting to stay in the region, to allow their children to finish the school year and also because they see future opportunities in the region and enjoy the Asian lifestyle.?

Despite this trend, Crown has seen double digit increases in the number of outbound moves from Hong Kong versus the first two months of last year. Many HR departments are placing a hold on movement (both domestic and international) until the market stabilizes or they are looking closer at hiring qualified ?local? expats instead of hiring from overseas.

No Country is Immune
The explosive growth and associated competitive labor market in Dubai is loosening up and real estate values are dropping, following unprecedented rises in the last few years. In Dubai, rental prices are expected to decline by up to 30%, down from an estimated 15% rise in 2008, according to an Egyptian-owned investment bank. For the UAE capital Abu Dhabi, however, a 10-15% increase in rents is expected this year due to acute housing shortages.

South Africa has not been as hard hit by the global economic crisis due to the implementation of a National Credit act two years ago. The National Credit act dramatically affected businesses across South Africa in 2007 but made banks almost immune to the current banking woes. Australia?s mining sector employed many South Africans in 2008 but with the downsizing taking place in Australia, many South Africans are now jobless and planning to return home.

A Deer in the Headlights?
Some companies are watching and waiting before taking definitive actions. Leon Hulme, from Seoul said, ?we are seeing some clients adopting a ?deer in the headlights? style of behavior, seemingly unsure of what to do at the moment and therefore sitting back and riding out the turmoil a little longer.

?This might change in the coming months as the majority of expat contracts will come to an end later in the year, to coincide with school terms. It?s less of an administrative burden and helps maintain employee morale to let their contracts come to their natural end.?

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