For the rich, living in Asia is costlier

If you’re wealthy, Asia-Pacific is the most expensive place to live in, with Shanghai overtaking Hong Kong as the priciest city in the world.

Those are some of the key findings from a Julius Baer Group report about luxury lifestyles released yesterday, which stated that part of the reason for the region’s success was its swift recovery from the coronavirus pandemic. By contrast, the Americas is the most affordable because of the slump in the US and Canadian dollars and sharp devaluations of Latin American currencies.

Asian cities are more expensive partly because “Covid didn’t become an epidemic quite the same way it unfortunately became in the other cities in the index,” said Rajesh Manwani, Julius Baer’s Head of Markets & Wealth Management Solutions in Asia Pacific. “So they were able to function more normally than the others.”

The Covid-19 crisis that has swept through the world and left hordes of people without jobs has also enriched the wealthy. Those from the tech industry have done particularly well as lockdowns helped accelerate a switch to online for everything from learning to shopping and socialising. The 500 richest people on Earth added a combined $1.8 trillion to their fortunes last year, with Tesla Inc’s Elon Musk and Amazon.com Inc’s Jeff Bezos gaining the most, according to the Bloomberg Billionaires Index.

While the collapse in tourism led to a 9.3% plunge in the price of hotel suites last year, business-class plane tickets became 11% more expensive, the biggest jump among luxury categories as airlines had to make up for a scarcity of sales, Julius Baer said. The cost of fancy shoes for women slumped the most, dropping 12%.

In Asia, the cost of goods and services for the wealthy has been much lower than the region’s consumer-price index since 2013, it added.

Shanghai overtook Hong Kong as the most expensive city as prices rose 6% last year, while those in Hong Kong were flat, according to Mark Matthews, head of research Asia Pacific at Julius Baer. In Shanghai, there was “quite an anomaly” where business-class flights went up 82% and hotel suite prices went up 15%, he added.

Overall, though, living a luxury lifestyle around the world became only about 1% more expensive in 2020, with the rich increasingly turning to conscious choices that may result in fairer prices for producers, according to the report.

Julius Baer’s Global Wealth and Lifestyle Report analysed the price inflation of 20 luxury items indicative of the lifestyle of high-net-worth individuals in 25 cities across regions. To adapt to the changing world, the 2021 edition replaced categories including personal trainers, wedding banquets, botox and pianos with bikes, treadmills, health insurance and a technology package.