SHANGHAI has been named Asia’s most expensive city for a myriad of luxury goods and services, overtaking Hong Kong as the prime location where High Net Worth Individuals (HNWI) splurge on their lifestyle spending, according to a report.
The Bank Julius Baer Co.’s annual Wealth Report: Asia, which tracks where the rich spend their money, also found that jewellery and gems are among the most favoured passion investments among HNWIs in Asia.
The report cited luxury auction house Sotheby’s findings that Asian clients account for about a third of global high-end jewellery sales.
In one comparison, Julius Baer benchmarked the prices of the Cartier Love Bracelet. The piece of jewellery cost the most in Shanghai at US$48,143 while in Kuala Lumpur, Malaysia, it retails at US$41,818, which leads it to replace Hong Kong as the most price competitive market.
Shanghai’s large price tag for the item is due to high import tariffs on luxury jewellery – approximately 40 percent – while the findings on the two other cities arose from the twin effects of higher prices in Hong Kong and marked declines in Kuala Lumpur.
The Switzerland-based bank defines the HNWI as those with a net investible wealth of US$1 million or more. The assets they possess exclude the property that is their main residence.
In its eighth year, the survey involved the collection of data from June 2017 to July this year.
Also contained in the report is the Julius Baer Lifestyle Index 2018, which compares 22 goods and services across 11 Asian cities, including Hong Kong, Singapore, Shanghai, Mumbai, Taipei, Jakarta, Manila, Seoul, Kuala Lumpur, Bangkok, and Tokyo.
In the report’s the His & Hers Index, the bank compared the cost of grooming for wealthy women and men across Asia.
“Our Julius Baer Lifestyle Index maintains its upward trajectory since its launch eight years ago, underscoring the strength in demand for luxury goods and services in Asia,” the bank said in a statement.
“Government efforts to boost domestic consumption, price harmonisation by luxury companies, and the scarcity factor were among the contributing factors to robust price trends.”
What justifies the price tag of a luxury jewellery piece?
According to Julius Baer, this depended on the item’s prestigious brand, the intricacy of the craftsmanship, as well as the quality of the precious stones, all of which enhance its desirability.
“Market trends are significant too. For instance, natural pearls went through a spectacular growth a few years ago, though prices have since cooled off,” it said.
“Looking at Asian demand, the rise of mainland Chinese buyers over the past decade bears close watching. Despite China’s anti-corruption drive, the impact on domestic spending on high-end jewellery has been limited.”
Luxury jewellery sales in China increased by 6.6 percent year-on-year to RMB14.9 billion (US$2.17 billion) in 2017, the bank said, citing data from market researchers Euromonitor.
“Many mainland Chinese continue to buy rare pieces that include top-of-the line diamonds, coloured gemstones and jadeite to diversify their investment portfolios amid a volatile global economy.”
“Vintage signed jewellery has also garnered investor interest, given their appreciation in value in recent times.”