Shanghai has emerged as the most expensive city for luxury living in Asia, while Mumbai is the least expensive in terms of costs for wealthy individuals, according to the 2015 Lifestyle Index by Swiss private bank Julius Baer. Costs of residential properties, measured by sale prices of residential property with around 4,000 square feet in a prime location, shot up 15% in Shanghai in 2015, while costs of wedding banquets at top hotels rose 6% from the same time last year in local currency terms.
In the survey of 11 Asian cities, Shanghai was the most expensive market for goods like jewelry, luxury cars and fine wine. It is the second most expensive city when it comes to services costs such as a business class flight to New York, a wedding banquet at a top hotel, and golf club membership.
“We now see more billionaires in China than in the U.S.,” said Tom Meier, Asia Pacific head at Julius Baer. “Because of the strong growth in the high net-worth population, it’s an environment that you can pass on higher costs.”
Prices were measured before the China stock market tanked in the summer. But the trend has hardly changed since then because property prices have gone up even further, with home prices in Shanghai up 6.5% in September year on year.
The Shanghai Composite is down a third from its June peak, but is still up 50% year on year. Last year, Shanghai saw a rare dip in total prices because of a weak property market.
But a slump in tourism has taken a toll: Hotel suite prices fell by 5%, though at a price of $798 per night for a hotel suite, it is still four times as much as the price in Kuala Lumpur and three times as much as the cost for Seoul.
Prices have fallen across the board in Tokyo, even in yen terms. Costs of business class flights fell by 9%, while residential property prices were 6% lower. Tokyo, once the most expensive city in Asia, now straddles the middle ground in terms of relative pricing. In fact it’s possible to get a bargain in Tokyo on things like business class flights, legal advice, luxury watches and cars, according to the survey.
In Mumbai, property prices fell by 9%, the biggest drop among the 11 cities tracked in the survey. But the authors don’t expect India to stay cheap for long. They expect the country’s economic expansion to strengthen in the next year, supported by the revival of infrastructure projects and growth in equity markets. This bodes well for the growth of wealthy individuals in India, the report said.
Last year’s survey didn’t rank the Asian cities in terms of overall costs. Among the 20 luxury categories, 14 observed increases this year. Last year, most of the cities saw a decrease in the cost of luxury goods and services, except Seoul.
By Wei Gu Courtesy The Wall Street Journal