Julius Baer’s Global Wealth and Lifestyle Report 2021 explores the evolving world of high-end consumption. This is the Index’s second year considering global trends, following its expansion from the Asia Lifestyle Index in 2020. This year’s report covers how lifestyles, regions, and wealth are changing across 25 major cities globally. What’s also new is that there are 12 special city portraits, which showcase testimonials from local residents, market analysis from our Julius Baer regional experts and research data.
Overall findings:
- Asia remains the most expensive region, partly because of the region’s swift recovery from the global health crisis, currency stability, and price resilience for the index items. Shanghai is now the most expensive city in the index, stealing the top spot from Hong Kong. Tokyo and Hong Kong are the second and third most expensive cities, respectively – yet the picture remains mixed, with Mumbai still one of the places where wealth goes the furthest.
- The Americas is the most affordable region for living a luxury lifestyle this year. This is mostly due to the price of the US and Canadian dollars falling against other major global currencies and a sharp devaluation of currencies in Latin America. Mexico City and Vancouver are amongst the most affordable cities in the index. Just one city in the Americas (New York) remains in the top ten. This region is the most expensive place for healthcare, but personal technology remains affordable, as the US is home to many of the world’s technology titans.
- Johannesburg has emerged as the most well-priced place for luxury in the 2021 index. All the other cities in Europe, the Middle East, and Africa have risen up in the rankings, buoyed by the strength of the euro and the Swiss franc, with the exception of London – due to Brexit uncertainty.
Outpacing inflation
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When Julius Baer launched its first Global Lifestyle Index in 2020, no one could have anticipated that a global pandemic would soon disrupt social and economic life around the planet. The index was created to gauge the price inflation of a basket of goods that is indicative of the lifestyle of high-net-worth individuals in cities around the world. It also enables investors to estimate what it takes to preserve, or even grow, their purchasing power in terms of portfolio returns.
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For anyone looking to stem the constant erosion of their wealth in real terms, understanding their purchasing power is an important first step. By combining a good knowledge of local inflation rates with the right wealth management and wealth preservation strategies, they should be able to continue living in the manner to which they are accustomed far into the future, while preserving their wealth for the next generation.
- Keeping prices ahead of inflation reflects the aspiration to maintain exclusivity. Purchasing power – especially in countries like China, which is now the key market for high-end goods and services – rises considerably faster than inflation.
Preserving your lifestyle and your wealth
- Maintaining a comfortable lifestyle and living well has never been more costly. The index shows that basket values are rising, driven by inflation, currency fluctuations, and the impact of local regulations and tougher taxes. It is no longer enough simply to maintain the same level of relative wealth: to maintain the status quo, high-net-worth individuals must be invested and stay invested.
- Preserving wealth for future generations requires long-term strategic thinking. It is only by actively engaging in wealth planning that families can plot a course that ensures the preservation of their legacy, not only in terms of maximising wealth but also establishing the values that will stand the test of time and create a positive impact in the world.
- Key steps to preserving your wealth include: encourage open dialogue, be open to different views and values, professionalise your wealth management, keep taxation top of mind, and build family expertise to tackle complexity.