Increased spending by Hong Kong’s wealthy residents pushed the city one notch higher in terms of the “cost of living extremely well”, making it the world’s second-most expensive metropolis, according to a Julius Baer report on Tuesday.
Singapore retained the title, with London and Shanghai in third and fourth place, respectively. Monaco rounded out the top five. Shanghai dropped one spot from last year while London climbed one place.
The Swiss bank’s fourth annual global wealth and lifestyle report compared the cost of a basket of goods and services in 25 cities from November 2023 to March 2024, analysing the consumption patterns of high-net-worth individuals (HNWIs) – those with at least US$1 million of investible assets.
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“As the mainland China and Hong Kong economies have gradually recovered from the Covid-19 pandemic, demand for luxury goods and services has increased, pushing prices up,” said Kenny Ng Lai-yin, a strategist at Everbright Securities International.
The study found the “cost of living extremely well” globally, which includes cars, property, whisky, fine dining and jewellery, has increased by 4 per cent in US dollar terms this year, slower than the 6 per cent surge seen in 2023.
Each city had its own unique proposition that made it expensive. In Singapore, it was buying a car, while in Hong Kong it was legal services, and fine dining in Shanghai.
Hong Kong also saw an increase in the prices of many other luxury items. The price of a hotel suite surged by 22.9 per cent and ladies’ shoes by 12.7 per cent. However, the price of whisky declined by 18.8 per cent.
Many Asian cities saw their rankings fall because of weaker currencies. Tokyo was hit the most, slumping to 23rd from 15th, as the yen sank to the lowest in three decades.
Zurich saw the biggest improvement in ranking, climbing to sixth place from 14th because of a stronger Swiss franc.
“This year’s report shows that currencies matter a lot,” said Christian Gattiker, the head of research at Julius Baer.
Asia ranked as the second-most expensive region because of its economic growth after Europe, Middle East and Africa, which was consolidated as one region by the Swiss bank.
Asia is making significant strides in its development journey, showing the potential of innovation and collaboration, said Mark Matthews, head of research for Asia-Pacific at Julius Baer.
“The technological advancements of China and India, along with the robust economies of Southeast Asia, contribute to the region’s resilience and growth,” Matthews said. “Singapore, located in this dynamic environment, is leading the digital transformation.”
For HNWIs, healthcare was their top priority, with more than 63 per cent of respondents in Asia citing health and well-being as their main concerns, according to the study.
Wealthy individuals plan to invest more, while also splurging on travel and good food now that all pandemic-related travel restrictions have been lifted. In Asia, some 74 per cent of respondents spent more on five-star hotels this year, and 71 per cent spent more on fine dining, the report showed.
Seven in 10 wealthy individuals made sizeable returns on their investments over the past 12 months, with ESG (environmental, social and governance) their main guiding principle.
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