Dubai has dropped two places to rank as the 14th-most expensive city in the world for high-net-worth individuals (HNWIs) this year as decades-high inflation in developed markets erodes consumers’ purchasing power, according to a report by Julius Baer.
Asia remains the most expensive region in the world for wealthy people, holding six of the top 10 places, according to the Swiss private bank’s 2022 Global Wealth and Lifestyle report, which compiled an index using a basket of consumer goods and services that represent discretionary purchases by HNWIs — ranging from residential properties to airfares — and analysed prices in 24 key cities around the world.
Shanghai retained the top position as the most expensive city in the world for the rich, followed by London, Taipei, Hong Kong and Singapore. Monaco, Zurich, Tokyo, Sydney and Paris round out the top 10 most expensive cities list for HNWIs, who are described as having more than $1 million in investable assets.
“Dubai is not cheaper than it was last year as prices for goods and services have gone up by 19 per cent on average,” Mark Matthews, head of research for Asia Pacific at Julius Baer, said.
"In comparison, prices in Shanghai shot up by 30 per cent. Other cities such as Sydney and São Paolo have, instead, become more expensive than Dubai."
The world’s 500 richest people have seen a combined $1.4 trillion erased from their cumulative fortunes this year, according to the Bloomberg Billionaires Index, as global financial markets buckle under the weight of higher interest rates and inflation anxiety.
It is in stark contrast to last year, when soaring markets boosted the world’s population of HNWIs by about 8 per cent, including by 13 per cent in North America, according to a Capgemini World Wealth report released on Tuesday.
Overall, the price of goods and services in the Julius Baer basket registered an increase of 7.5 per cent globally. About 75 per cent of goods and 63 per cent of services experienced a price rise since the 2021 Julius Baer report. In comparison, prices increased by only 1.05 per cent last year, the report showed.
Dubai ranked as the most expensive city in Europe and the Middle East to buy a car and the most expensive place globally to study for an MBA, the index found. It also ranked as the fifth-most expensive city globally to buy a bicycle.
“Dubai has launched new visas to attract the wealthy, investors, entrepreneurs and innovators,” said Mr Matthews. "This and other measures have helped it to emerge from the pandemic stronger than before."
London, driven by strong price increases for residential properties, high inflation and hospitality services, climbed to second place from eighth in last year’s rankings. New York was ranked the 11th-most expensive city in the world, according to the Zurich-based lender.
Tokyo was pushed down the rankings as divergences in monetary policy between the US Federal Reserve and the Bank of Japan considerably weakened the yen against the dollar, the bank said in the report.
The Americas region ranked as the cheapest to live a luxury lifestyle this year and does not have a single city in the top 10 list, the index showed. However, Brazil's financial hub of São Paulo climbed from 21st place to 12th in the rankings as a result of record inflation and import taxes, Julius Baer said.
Miami and Vancouver are both less expensive than Bangkok, which was the 15th-most expensive city for the ultra-wealthy, the lender added.
Mumbai emerged as the cheapest city for HNWIs to live in due to a big drop in the price of luxury items. Johannesburg, the only African city in the index, is also inexpensive, thanks to lower property prices, according to the report.
The luxury categories that recorded the biggest price gains included bicycles (30 per cent), hiring a lawyer (33 per cent) and technology packages (41 per cent). The luxury categories with the biggest price falls were health insurance (24.4 per cent), the cost of studying for an MBA (11.7 per cent) and cars (9.5 per cent).
Hosting Expo 2020 and its efficient handling of the pandemic helped Dubai attract talent from financial hubs in Asia, which had strict Covid-19 policies, said Omar Barghout, head of investment advisory for the Middle East at Julius Baer.
"Family offices and hedge funds have also moved to Dubai from Europe to escape uncertainty, thereby driving demand for residential properties. High oil prices help the government to invest the surplus in its economy."
Top 15 most expensive cities to live in for the ultra-wealthy in 2022
- Hong Kong
- New York
- Sao Paulo