For the rich, living in Asia is costlier than anywhere else

Shanghai overtook Hong Kong as the most expensive city in the world, said a Julius Baer Group report.
Shanghai overtook Hong Kong as the most expensive city in the world, said a Julius Baer Group report.PHOTO: ST FILE

SHANGHAI (BLOOMBERG) - 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.

Hong Kong fell to third place from the top spot last year, Tokyo ranked second and Taipei ranked fifth. Other Asian cities in the list include Singapore (9th), Bangkok (11th), Manila (16th), Jakarta (20th) and Mumbai (22nd). 

Those are some of the key findings from a Julius Baer Group report about luxury lifestyles released on Friday (April 9), which stated that part of the reason for the region's success was its swift recovery from the Covid-19 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 Mr 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 US$1.8 trillion (S$2.41 trillion) to their fortunes last year, with Tesla's Elon Musk and Amazon's Jeff Bezos gaining the most, according to the Bloomberg Billionaires Index.

While the collapse in tourism led to a 9.3 per cent plunge in the price of hotel suites last year, business-class plane tickets became 11 per cent 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 per cent.

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 per cent last year, while those in Hong Kong were flat, according to Mr Mark Matthews, head of research Asia-Pacific at Julius Baer.

In Shanghai, there was "quite an anomaly" where business class flights went up 82 per cent and hotel suite prices went up 15 per cent, he added.

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

In the case of Singapore and Mumbai, the nominal cost of living for the wealthy actually declined. 

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.