Asia is still the most expensive region partly because of its swift recovery from the pandemic, currency stability, and the price resilience of the sought-after items included in the Swiss bank’s lifestyle index.
“Until recently, the luxury goods market has predominantly been used as a way to highlight one’s status. While it is still a status symbol, today’s Asian buyer also recognises this category as an investment that may offer them an avenue to secure and grow their wealth,” noted Jimmy Lee, Julius Baer’s head of Asia Pacific.
“The well-heeled seek out properties and investments beyond their regions, notably in ‘smart addresses’ that help to open the door to better opportunities for future generations of their families,” he added.
The Julius Baer Lifestyle Index takes a basket of 18 goods and services that reflect the rich lifestyle – ranging from residential property to laser eye surgery, tasting menus to treadmills – and analyses costs in 25 key cities around the world.
Investors can use the results to estimate the portfolio returns needed to preserve, or even grow, their purchasing power, according to the authors of the second Julius Baer Global Wealth and Lifestyle Report 2021.
Shanghai is now the most expensive city in the index, taking the top spot from last year’s priciest city Hong Kong, which this year was also pipped by Tokyo. All three have among the most concentrated populations of millionaires and billionaires – although the region is mixed, with Mumbai still one of the places where wealth goes furthest. Meanwhile, Bangkok and Singapore slipped down the rankings due to the collapse in global tourism last year.
Nevertheless, Asian demand has been a significant factor in the business strategies of Western companies, and for many brands, this has meant introducing “bespoke limited editions with hints of Asian flair to collections” and launching flagship stores in these markets where demand often outpaces supply, according to Lee.
“All of this has led to an obvious outcome: our research over the past decade shows a higher inflationary environment in Asia than in the rest of the world,” he said.
Beyond these rankings, we believe the Asia-Pacific region has great potential for further growth. It offers good value for the production of consumer goods and services where high-quality output attracts a global clientele. The relative ‘affordability’ of a younger qualified workforce will continue to fuel growth in Asia-Pacific, according to report
“This economic growth is, conversely, also propping up the region as the world’s most expensive,” noted Lee.
Worldwide trends
Globally, the Americas are the most affordable region to live a luxury lifestyle. This is mostly because the price of the US and Canadian dollars have fallen, and there has been a sharp devaluation of currencies in Latin America. Mexico City and Vancouver are amongst the most affordable cities in the index. Just one city – New York – remains in the top 10.
Africa’s sole representative in the index, Johannesburg, is the cheapest place for luxury goods and services. All of the other cities in EMEA have risen up the rankings, buoyed by the strength of the euro and the Swiss franc, except London, due to Brexit uncertainty.
The luxury categories that have seen the biggest falls in prices in US dollar terms throughout the world are ladies’ shoes (-11.7%) and hotel suites (-9.3%). The biggest gains are in business class flights (+11.4%) and whisky (+9.9%).
