Wealth management group Julius Baer has published its Lifestyle Index, highlighting the cost of luxury goods around the world.
The index is based on a basket of 12 consumer goods and eight luxury services that represent discretionary purchases by high-net-worth individuals (HNWIs) globally in 2020.
The index is not intended to represent the comprehensive spending patterns of HNWIs, but rather to provide an indication of how selected goods and services are priced around the world.
This is used as the basis for further analysis of developments in HNWI consumption patterns and lifestyle considerations.
The data was gathered between July and September 2020 and prices included all taxes and ancillary fees and were converted from the local currency to USD on a fixed date.
The index shows that Shanghai is the priciest city in the world for HNWIs, where prices here have risen 6% in the past year in dollar terms – far more than the global average of 1%.
Business-class flights have seen one of the most extreme jumps in cost – up 82% in USD terms – as the travel sector attempted to offset the effect of Covid19 restrictions.
It is also believed that Shanghai, alongside Cape Town, will be the most prosperous high-end property market in the world in 2021, with prices rising 5%.
The top of the list is dominated by other Asian countries, with Tokyo and Hong Kong ranked second and third respectively.
The top ten list is as follows:
- Hong Kong
- New York
Overall, 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, Julius Baer said.
How South Africa compares
The one African city that is included in the report is Johannesburg, which has replaced Mumbai as the most affordable city in this year’s index.
South Africa’s largest city offers exceptional value for almost every item, despite a 5% jump in weighted average prices in local currency terms, Julius Baer said.
A sharp decline in the value of the South African rand has resulted in a 10% price drop in US dollar terms.
The below table shows how Johannesburg’s prices compare to the rest of the countries on the index:
“Johannesburg has a small luxury industry, relative to its size. The total luxury goods market was worth $693 million in 2020, a per capita spend of just $12. It is set to experience muted growth of 3.7% in 2021.
“Like most things in Joburg, high-end residential property is very affordable, costing a fraction of the international average. Prices have remained stable, with demand on the rise. Buyers are seeking out exclusive apartments boasting modern, hi-tech security.”
Julius Baer noted that Johannesburg is the economic hub of South Africa, many companies are headquartered there, and the affluent suburbs have attracted many successful businesspeople.
“Interest rate cuts introduced in early 2020 also lowered the cost of monthly repayments, making home ownership a more attractive prospect.”
“The effects of the pandemic notwithstanding, the South African economy has been in a downward cycle for 85 months in a row, while unemployment reached highs of 30 per cent last year. Any recovery is likely to be slow and protracted.”