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Wealth Report Asia 2013

The cost of living in luxury for Asia’s High Net Worth Individuals (HNWIs) continues to outpace standard measures of inflation. The Julius Baer Lifestyle Index, which is compiled as part of the annual Julius Baer Wealth Report, rose 8.0% in 2013. The third edition covers an expanded set of cities in across Asia, including Tokyo.

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The Julius Baer Wealth Report: Asia provides a comprehensive and exclusive analysis of the HNWI landscape in Asia. This year’s edition highlights that the case for Asia’s macroeconomic decoupling from mature economies is robust and underpins Julius Baer’s confidence that the region will remain a key driver in wealth creation for the longer term.

Aligned with this broad-based growth in wealth, the proprietary Julius Baer Lifestyle Index has been expanded. While the index historically covered Hong Kong, Singapore, Shanghai and Mumbai, starting from this year, Taipei, Jakarta, Kuala Lumpur, Manila, Bangkok, Seoul and Tokyo have been added and this expanded list will form the basis of future analysis. As Julius Baer’s presence and client base in Asia continues to grow, broadening the scope of the Lifestyle Index over time better reflects the overall strategy of Julius Baer. Furthermore, a comparison of luxury goods and services across various Asian cities has been compiled.

The Julius Baer Wealth Report: Asia 2013 makes note of the rapid change taking place in the luxury consumption area. Purchases of lower ticket items in the index, such as wine, cigars and watches are becoming more frequent and not seen as ‘one-off’ luxuries. Branding and prestige purchases are making way for buying value and quality, which suggests that, particularly in China, the luxury landscape is going to move away from some established market leaders.

Stefan Hofer, Emerging Market Economist, comments: “There are clear indications that China in particular is moving up the value chain. We anticipate that the number of HNWIs in Asia will grow from the estimated level of 2.17 million in 2013 to at least 2.82 million HNIWs in Asia (excluding Japan) by 2015.” 

Looking at Japan, he continues: “Japan’s economy is at a crossroads. In recognition of the profound changes that have taken place since September 2012, Tokyo has been included in this year’s report for the first time. We estimate that Japan is currently home to 2.1 million HNWIs, measured in US dollar terms. In contrast to other economies in Asia, where the report’s forecasts have included currency appreciation assumptions, Japan’s economic renaissance is, over the shorter term, created by yen weakness. Nevertheless, we are increasingly confident that Japan can cast off the yoke of deflation and drive further wealth creation into the medium term.”