Shanghai surpasses HK as costliest city for the rich


Shanghai has supplanted the Hong Kong Special Administrative Region (HKSAR) as the most expensive city for well-heeled consumers, as prices of high-end goods and services on the mainland city rose 6 percent year-on-year in 2021, a new Julius Baer Group report said on Friday.

The Swiss private-banking company said that the HKSAR now is the third-priciest city after Shanghai and Tokyo. The HKSAR’s slide was due in part to its relatively flat prices compared with the rising costs in US dollars on the Chinese mainland, the report said.

“Prices in Shanghai rose 6 percent, well above the global average of 1 percent, while prices in Hong Kong were flat,” said Mark Matthews, head of research at Bank Julius Baer Asia Pacific. “In Shanghai, there was ‘quite an anomaly’ where business-class flights went up 82 percent over the last year, and hotel suites rose 15 percent,” he added.

The HKSAR’s luxury goods and services are still significantly more expensive than they are almost elsewhere else, as the city has the world’s second-priciest residential property and legal fees, as well as the third-most expensive automobile and fine-dining expenses. Shanghai led the world in treadmill and lawyer costs in 2021.

Whereas prices in the HKSAR have proved relatively immune to the economic pressure induced by the pandemic, hotel-suite prices in 2020 nose-dived compared to 2019 in US dollar terms. Less-costly items also included women’s’ footwear, whose prices dropped 17 percent year-on-year, while wine and whisky have been a value compared with the international average as no duties are levied in the HKSAR.

“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”, the wealth management company said.

Rajesh Manwani, head of markets and wealth management solutions at Bank Julius Baer Asia Pacific, said, “COVID didn’t become an epidemic quite the same way it unfortunately became in the other cities in the index, so they were able to function more normally than others.”

Julius Baer forecasts Shanghai’s position to be reinforced by the appreciation of the Chinese yuan. “Currency has a huge impact on the index. We are looking for the Chinese yuan to strengthen over the twelve months from 6.55 (yuan per US dollar) today to 6.35, and that could reinforce Shanghai’s position,” he said.

Julius Baer’s Global Wealth and Lifestyle Report analyzed prices and consumer behavior worldwide to gauge the price inflation of a basket of 20 goods and services representative of the high-net-worth individuals in 25 cities across the world. The 2021 edition deleted categories such as personal trainers, wedding banquets, Botox and pianos, replacing them with bikes, treadmills, health insurance and a technology package to reflect the changing world amid the pandemic.