Dubai offers good value for high-end consumers among global cities, particularly if they are looking to purchase luxury property, according to a new study from Swiss bank Julius Baer.
The emirate ranked 17th overall out of 28 cities in the bank's inaugural Global Wealth and Lifestyle Report 2020, which tracked the price trends of 20 luxury goods and services. Dubai ranked 23rd within the luxury property segment.
“Luxury property, previously good value, is now exceptionally good value, as high levels of supply have seen prices fall consistently, by over a fifth in the past five years,” the report said.
Other cities with cheaper average high-end property listings are Johannesburg, Mexico City, Manila, Rio de Janeiro and Jakarta.
The survey covered ten cities in Asia Pacific, 10 in Europe, six in the Americas, Dubai in the Middle East and Johannesburg in Africa. Overall it found Asia to be the costliest region — with Hong Kong ranking as the world's most expensive city, followed by Shanghai, Tokyo, New York and Singapore. The most affordable city for luxury is Mumbai, followed by Johannesburg, Frankfurt, Istanbul and Barcelona.
“Contrary to popular belief, Europe is the most affordable continent, primarily because luxury items are not heavily taxed as elsewhere in the world especially Asia,” said Diego Wuergler, head of investment advisory at Julius Baer, which manages assets of 422 billion Swiss francs (Dh1.6 trillion) as of November.
Dubai is also quite affordable for luxury travel. The emirate ranked 26th most expensive city for a business-class flight to London or New York and 27th for the cost of a wedding banquet for 400 people at a top hotel.
However, the emirate is more expensive for a ladies’ purse and a suite at a five-star hotel, compared to other cities.
Beauty services, measured by the cost of Botox for crow’s feet, came in 8th, while laser eye surgery and a personal trainer came in 9th. Meanwhile, cars, ladies’ shoes and fine dining are priced averagely compared to other cities that were surveyed.
“Dubai offers one of the most affordable luxury residential properties compared to other markets globally in addition to cars and wedding banquets thus offering good value for consumers,” Mr Wuergler said. “On the other hand, services are on the more expensive side — including wellness services — and expectations are for this to change as more players enter the market.”
The city’s high cost of wellness services is a “possible consequence of its reputation for luxury breaks”, the report said. However, prices may become more competitive as new wellness themed resorts are scheduled to open in the coming years.
Elsewhere, Asia is the most expensive region for residential property and luxury cars. Hong Kong ranks above the 90th percentile globally for property, beauty services, fine dining, business class flights and lawyer fees. Mumbai, however, offers value across almost all goods and services.
In Europe, London is the priciest city with Zurich a close second, driven by high service charges and costly hotels and fine dining. Barcelona’s luxury property market, ranked 22nd, remains relatively inexpensive.
New York led the rankings in North America, being the most expensive city globally for a lawyer and a wedding banquet, while Vancouver is the cheapest globally for a luxury car and fine dining. In South America, prime property is a bargain in Rio de Janeiro and Mexico City, but other goods and services are more highly priced.
Julius Baer began tracking the cost of consuming luxury through its Wealth Report Asia in 2011. This year, it expanded the scope of the report to showcase "trends in high-end consumption around the world, which are of relevance to our clients", said Rajesh Manwani, Julius Baer's head of markets and wealth management solutions Asia Pacific.
______________
Inside the Dh45m Cayan Tower penthouse in Dubai
Who was Alfred Nobel?
The Nobel Prize was created by wealthy Swedish chemist and entrepreneur Alfred Nobel.
- In his will he dictated that the bulk of his estate should be used to fund "prizes to those who, during the preceding year, have conferred the greatest benefit to humankind".
- Nobel is best known as the inventor of dynamite, but also wrote poetry and drama and could speak Russian, French, English and German by the age of 17. The five original prize categories reflect the interests closest to his heart.
- Nobel died in 1896 but it took until 1901, following a legal battle over his will, before the first prizes were awarded.
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
Company profile
Name: One Good Thing
Founders: Bridgett Lau and Micheal Cooke
Based in: Dubai
Sector: e-commerce
Size: 5 employees
Stage: Looking for seed funding
Investors: Self-funded and seeking external investors
Mobile phone packages comparison
UAE currency: the story behind the money in your pockets
Who's who in Yemen conflict
Houthis: Iran-backed rebels who occupy Sanaa and run unrecognised government
Yemeni government: Exiled government in Aden led by eight-member Presidential Leadership Council
Southern Transitional Council: Faction in Yemeni government that seeks autonomy for the south
Habrish 'rebels': Tribal-backed forces feuding with STC over control of oil in government territory
RESULTS
%3Cp%3E5pm%3A%20Wathba%20Stallions%20Cup%20%E2%80%93%20Handicap%20(PA)%20Dh70%2C000%20(Turf)%202%2C200m%3Cbr%3EWinner%3A%20RB%20Sarab%2C%20Allaia%20Tiar%20(jockey)%2C%20Khalifa%20Al%20Neyadi%20(trainer)%3C%2Fp%3E%0A%3Cp%3E5.30pm%3A%20Mamsha%20Alkhair%20%E2%80%93%20Handicap%20(PA)%20Dh80%2C000%20(T)%201%2C600m%3Cbr%3EWinner%3A%20Mutaqadim%2C%20Ray%20Dawson%2C%20Ibrahim%20Al%20Hadhrami%3C%2Fp%3E%0A%3Cp%3E6pm%3A%20Emirates%20Fillies%20Classic%20%E2%80%93%20Prestige%20(PA)%20Dh100%2C000%20(T)%201%2C600m%3Cbr%3EWinner%3A%20Almotajalliah%2C%20Ray%20Dawson%2C%20Ibrahim%20Al%20Hadhrami%3C%2Fp%3E%0A%3Cp%3E6.30pm%3A%20Emirates%20Colts%20Classic%20%E2%80%93%20Prestige%20(PA)%20Dh100%2C000%20(T)%201%2C600m%3Cbr%3EWinner%3A%20Fadwaan%2C%20Antonio%20Fresu%2C%20Ahmed%20Al%20Mehairbi%3C%2Fp%3E%0A%3Cp%3E7pm%3A%20The%20President%E2%80%99s%20Cup%20%E2%80%93%20Group%201%20(PA)%20Dh2%2C500%2C000%20(T)%202%2C200m%3Cbr%3EWinner%3A%20Mujeeb%2C%20Richard%20Mullen%2C%20Salem%20Al%20Ketbi%3C%2Fp%3E%0A%3Cp%3E7.30pm%3A%20The%20President%E2%80%99s%20Cup%20%E2%80%93%20Listed%20(TB)%20Dh380%2C000%20(T)%201%2C400m%3Cbr%3EWinner%3A%20Western%20Writer%2C%20Richard%20Mullen%2C%20Bhupat%20Seemar%3C%2Fp%3E%0A
Kandahar%20
%3Cp%3E%3Cstrong%3EDirector%3A%3C%2Fstrong%3E%20Ric%20Roman%20Waugh%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EStars%3A%C2%A0%3C%2Fstrong%3EGerard%20Butler%2C%20Navid%20Negahban%2C%20Ali%20Fazal%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ERating%3A%3C%2Fstrong%3E%202.5%2F5%3C%2Fp%3E%0A
