Julius Baer Index identifies bikes and whisky among life’s dearer luxuries

BICYCLES and whisky are among the goods that the rich have to shell out more for, with their prices having risen some 30 per cent in the past year, says Julius Baer's Lifestyle Index, which looks at a basket of goods and services that wealthy people buy and use.

Rising environmental consciousness among high-net-worth individuals has spurred an interest in non-polluting two-wheelers, said the Swiss private bank, which released the findings of its third annual Global Wealth and Lifestyle Report on Wednesday (Jun 15).

The "green intentions" of the well-heeled, coupled with a global shortage driven by Covid-19 and supply-chain problems, have sent bicycle prices up by 31.4 per cent - making it the third-biggest riser in the index.

The top 2 risers were technology, which rose by 41 per cent, and lawyer's fees, went up by 32.6 per cent.

Whisky prices rose 27.4 per cent as the result of a global shortage and because it has become increasingly collectible; the liquor took fourth spot.

Wine prices, on the other hand, fell by the most among the goods and services surveyed - 26.1 per cent.

Other goods or services which fell significantly in price were health insurance, for which prices fell 24.4 per cent, and MBA degrees, which took an 11.7 per cent dip.

Inflation hit across the board, however. Three-quarters (75 per cent) of goods and 63 per cent of services experienced a price rise since last year's index was compiled.

In Singapore, whisky and technology were also among the top 5 price risers, climbing 53 per cent and 45 per cent respectively. Others top risers included business-class flights (45 per cent), hotel suites (38 per cent), and lawyers' fees (36 per cent).

The biggest falls in Singapore were logged for items such as MBA degrees (12 per cent), wine (14 per cent), and health insurance (12 per cent).

The index, which surveyed prices in 24 major cities, found the world's most expensive cities to be largely Asian ones, as was the case last year.

Shanghai retained the top spot, followed by London; the third, fourth and fifth spots were all taken by Asian cities - Taipei, Hong Kong and Singapore.

High-net-worth individuals in Asia were the "most confident" in both their professional and financial situations, relative to wealthy individuals in other regions, the report said. Many have invested in self-improvement, becoming more likely to spend in areas such as education, cosmetic surgery and fitness, it noted.

While the increase in spending was higher in Asia than the other regions, these expenditures were on things that are "sensible for the future", said Mark Matthews, Julius Baer's Asia Pacific head of research, in a media briefing on Wednesday.

When asked about their spending priorities for the coming year, 70 per cent of wealthy individuals in Asia picked health insurance. In the Middle East, 58 per cent of wealthy individuals intend to prioritise spending on degustation dinners, while in Europe and Latin America, the rich plan to prioritise spending on hotel suites.

The report also found that wealthy Asians to be the most conscious about environmental, social and governance (or ESG) concerns. All respondents from the region cited sustainability and ESG considerations as "extremely important", "very important", or "important" factors in their investment decisions. Respondents from other regions ranked these lower in importance.

In terms of South-east Asian cities, the report saw Bangkok fall 4 places to the 15th spot, while Manila fell from 16th to 21st place. Manila is the only city in the index to have become cheaper for high-net-worth individuals to live in, and has the most affordable property in Asia.

Still, Matthews highlighted Bangkok as a city more suitable for the rich. "Maybe now that the world is opening up again, Thailand is opening up again, Bangkok represents an opportunity for high-net-worth individuals who are looking for a good city to live in and also relatively good value."

The report also called Jakarta, which rose 1 place to 19th, a city to watch. While it is vast and confronted with fractured geography and natural hazards, Jakarta is a "vibrant modern metropolis" near to most of the country's population as well as to Singapore.

While change will still be driven by Asia in the coming years, the Asian Century story may be less straightforward than previously thought, with contenders old and new vying to become centres of global wealth, Julius Baer said.

"American declinism is probably overstated," the report noted, even as cities in the Americas emerged the cheapest overall in the index. No city in the Americas emerged among the top 10 most expensive.

The report added: "In the early days of the pandemic, Asia's disciplined, efficient lockdowns impressed many. But it has not escaped the world's notice that it was the rather more disordered, individualistic West whose industries produced the best vaccines fastest."

North American cities, in particular, could have been underpriced in the latest index due to temporary weakness of the dollar amid recovery from the pandemic, it said.

The report also said European cities have remained attractive and relatively expensive, because the wealthy regard them as good places to do business and to live. They are also culturally rich and relatively closer to cities in Asia.

Complexity and uncertainty will hold across the board amid the lingering pandemic, stretched supply chains, inflation, geopolitical tensions, and global warming, it said.

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