Asia Pacific News

Asia Pacific remains the most expensive region for the ultra-wealthy

Asia Pacific remains the most expensive region for wealthy individuals while the three most expensive cities in the world for the rich are Shanghai, Tokyo and Hong Kong, according to Swiss private bank Julius Baer.

Meanwhile, Europe, the Middle East, and Africa region swapped places with the Americas to become the second most expensive region for high-net-worth individuals (HNWIs), defined as people with more than $1 million in investable assets, Julius Baer’s Global Wealth and Lifestyle Report 2021 showed. The Americas are now the cheapest region for HNWIs, according to the report.

Dubai climbed five positions to rank as the 12th most expensive city globally for wealthy individuals, according to Swiss private bank Julius Baer.

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“The change in Dubai’s ranking is due to a number of factors, including removal of some cities from the index, large fall in prices for some cities in Americas due to currency weakness, rejigging of the index composition and overall price increases for the Dubai Index items,” Mark Matthews, head of Asia Pacific research at Bank Julius Baer, told The National.

The Zurich-based bank compiled an index taking a basket of consumer goods and services that represent discretionary purchases by HNWIs – ranging from residential property to laser eye surgery – and analysed costs in 25 key cities around the world.

The number of ultra-high-net-worth individuals (UHNWIs), people with over $30m in investable assets, in the Middle East is projected to increase 24.6 per cent in the next five years, according to a February report by property consultancy Knight Frank. The region will remain the fourth-largest wealth hub in the world, the report added.

The change in Dubai’s ranking is due to a number of factors, including removal of some cities from the index, large fall in prices for some cities in Americas due to currency weakness and overall price increases for the Dubai Index items

Mark Matthews, head of Asia Pacific research, Bank Julius Baer

The wealth manager changed the composition of the second edition of the Lifestyle Index to reflect the evolving consumer tastes in a post-Covid-19 world. Wedding banquets, pianos, beauty services and personal trainers have been excluded to make way for new items such as bicycles, treadmills, technology packages and health insurance.

Overall, the price of goods and services in the basket registered an increase of just 1.05 per cent globally, Julius Baer revealed.

Most index items in Dubai are priced at the international average or higher, the report showed. However, the emirate’s biggest advantage is that its residential property is worth only 9 per cent of what it costs to buy the most expensive real estate in the world (Monaco), the study found.

The luxury categories that have seen the biggest price falls in the index are ladies’ shoes (11.7 per cent) and hotel suites (9.3 per cent), while the biggest gains are in business class flights (11.4 per cent) and luxury watches (6.6 per cent), the report found.

“The relatively strong performance of Asia was driven by a broad variety of reasons. Covid-19 did not become an epidemic in Shanghai, Tokyo, Hong Kong, Taipei, Bangkok and Singapore the way it did in most other cities in this index,” Mr Matthews said.

However, there are outliers like India’s commercial capital Mumbai, according to the Index. Residential property costs less than half the global average in this Indian city and the only expensive items are cars.

The price increases in EMEA were primarily driven by currency changes. As European currencies such as the Swiss franc and the euro gained against the US dollar, cities such as Zurich, Paris and London became more expensive, the report findings showed. Johannesburg emerged as the cheapest city in the world for HNWIs to live in.

The Americas region is the most affordable to live a luxury lifestyle this year, the index revealed. This is mostly due to the price of the US and Canadian dollars falling against other major global currencies and a sharp devaluation of currencies in Latin America. The region now only has one city in the top 10 – New York.

“Next year, the most expensive cities will probably still be in China and the most important consumers of high-end goods will be the Chinese,” the report said.

The Swiss bank also found that the “conscious consumption movement” is taking off as Covid-19 has raised consumer commitment and awareness of buying ethically and sustainably. Many of these changes in behaviour are likely to endure long after the pandemic, it added.

“Millennials [aged between 25 and 40] and zillennials [aged 24 and less] are mostly adopting these environmental-friendly lifestyles. They derive greater pleasure from experiences and their values dictate the things they buy,” Mr Matthews said.

He added that these two demographics expect companies that manufacture these products to espouse values such as inclusivity. They are also vocal about the need to reduce carbon emissions.

A lot of investors in the GCC and Dubai took more calculated risks last year and shifted from bonds and fixed-income assets to equities in thematic sectors, such as FinTech and sustainability, according to Omar Barghout, head of investment advisory for the Middle East at Julius Baer.

The Swiss bank expects a significant rise in inflation starting around the middle of this year for everyone, including HNWIs.

15 most expensive cities to live in for the ultra wealthy:

  1. Shanghai
  2. Tokyo
  3. Hong Kong
  4. Monaco
  5. Taipei
  6. Zurich
  7. Paris
  8. London
  9. Singapore
  10. New York
  11. Bangkok
  12. Dubai
  13. Milan
  14. Sydney
  15. Barcelona

Updated: April 11, 2021 10:35 AM

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