SCB Julius Baer unveils Global Wealth and Lifestyle Report 2021 which reflects the HNWI lifestyle. The trend of Conscious Consumption Movement is taking off

SCB Julius Baer, a strategic wealth management joint venture between Siam Commercial Bank - the first Thai Bank - and Julius Baer, the leading Swiss wealth management group, unveils “Global Wealth and Lifestyle Report 2021 (GWLR)”, which analyses prices of luxury goods consumed by high-net-worth individuals (HNWI) across 25 key cities. This is the Index’s second edition reporting on global trends, following its original version focused on Asia and introduced in 2011. The report also captures developments in the ‘Conscious Consumption Movement’, which is truly taking off as COVID-19 has raised consumer commitment to, and awareness of, buying ethically and sustainably.

In a wide-ranging index, Julius Baer tracks prices and consumer behaviour around the world to gauge the price inflation of certain goods and services that are representative of the HNWI lifestyle in key cities around the world. With this report, investors can estimate the portfolio returns needed to preserve, or even grow, their purchasing power. A focal point in the latest edition is the impact of COVID-19 on high-end consumption: did the pandemic fundamentally re-wire the global consumer’s mindset, or did it accelerate trends that were already set in motion? The findings of the Julius Baer Lifestyle Index 2021 show the continuation of many of the underlying trends of recent years, with COVID-19 impacting prices sharply in specific travel related areas such as flights and hotel suites.

While regional differences were found, overall, the price index reflecting the lifestyle of wealthy individuals around the world showed an increase of just 1.05 per cent. Meanwhile Asia continues to be the most expensive region in the world for high- and ultra-high-net-worth individuals.

Like previous years, the Julius Baer’s Lifestyle Index in 2021 points to two clear conclusions for those looking to preserve their wealth. The first is to invest, taking into consideration inflation and other factors, such as exchange rates and local regulations, playing a huge role in consumer’s purchasing power. Secondly, adopting the right wealth management and planning strategies are essential to preventing a real-term erosion of wealth over time.

A notable emerging global trend mentioned in the previous edition of the Global Wealth and Lifestyle Report was the rise of ‘Conscious Consumption’. This year, the movement has gone mainstream, becoming a central theme in nearly every sector.

Key findings from the latest edition include:
  • COVID-19 has raised consumer commitment to, and awareness of, buying ethically and sustainably. There is considerable evidence that consumption patterns and preferences are changing faster than ever before. The world’s consumers are definitely becoming more conscious, and the trend is truly taking off. The report notes that luxury spending will rebound following the crisis, and the demand for ethical and sustainable purchases will remain strong. Looking ahead, it is expected that the push for a more conscious approach to consuming, living, working, and investing will only grow.
  • Even when it comes to high-end goods and the premium services sector, consumers in the most expensive cities of the different continents are moving towards more conscious choices, which may result in fairer prices for the producers.

The trend is also reflected in HNWI behaviour when it comes to managing their own wealth. According to Julius Baer, the clients are trying, more than ever before, to make their assets work for future generations (i.e. their own descendants), but potentially also for the world at large, be it through foresighted planning, impact investing, sustainable solutions, or philanthropy. As a wealth manager, it is Julius Baer’s role to support this positive shift by helping investors make educated choices to better understand the broader implications of their investments.

Key findings of the Julius Baer’s Lifestyle Index 2021:
The latest Lifestyle Index is changing to reflect the evolving world of high-end consumption. This year’s changes to the selection of goods and services have largely benefited those living in Asia Pacific region, where certain new items tend to be cheaper. Despite this, 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. Shanghai is now the most expensive city in the index, clinching the top spot from Hong Kong. Tokyo and Hong Kong are the second and third most expensive cities respectively, with Mumbai still being one of the places where wealth goes furthest.

The Americas are the most affordable region to live a luxury lifestyle this year. This is mostly due to the price of the US and Canadian dollars falling against other major global currencies, and a sharp devaluation of currencies in Latin America. Mexico City and Vancouver are amongst the most affordable cities in the index. Just one city – New York – remains in the top 10. This region is the most expensive place for healthcare but personal technology remains affordable, as the US is home to many of the world’s tech titans.

Johannesburg has emerged as the most well-priced place for luxury in the 2021 index. This is the only African city represented in the index, and was one of few cities to experience significant price falls over the past year as the South African rand depreciated significantly. All of the other cities in EMEA have risen up the rankings, buoyed by the strength of the euro and the Swiss franc, except London, due to Brexit uncertainty.

The collapse of global tourism in 2020 has had a significant impact on this year’s index. In Asia, Bangkok and Singapore have both slipped down the rankings, while the dearth of travellers has also hit many European cities. For the cost of business class flights across the world, the scarcity of sales prompted by the crisis, has forced airlines to either ratchet up prices to cover their costs or dump seats for a bargain to attract travellers. It is unclear how the travel industry will fare in the wake of the crisis: a boom in travel is likely once restrictions are eased, but changes to the consumer mindset and a new desire to live more sustainably could hamper the sector in the long term.

The luxury categories that have seen the biggest falls in prices in USD terms are ladies’ shoes (-11.7%) and hotel suites (-9.3%). The biggest gains are in business class flights (+11.4%) and whisky (+9.9%). The ‘Experiential Spending’ is on the rise. The report shows that the cost of fine dining has risen, as consumers are willing to pay more for their gastronomic adventures in the wake of the COVID-19 crisis. This corresponds with a wider trend towards ‘experiential spending’. After the isolation and life-limiting impact of repeated lockdowns across the world, shoppers are expected to shift discretionary spending away from goods towards memorable trips, events, and experiences.

Miss Lalitphat Toranavikrai, Chief Executive Officer, SCB-Julius Baer Securities Co., Ltd., concluded, “Based on the ‘Global Wealth and Lifestyle Report 2021’ by Julius Baer, we found investment essential. In recent years, the costs for maintaining a comfortable lifestyle and living well has never been more costly. It is no longer enough to maintain the same level of relative wealth: to maintain the status quo. High-net-worth individuals must be invested and stay invested. Preserving wealth for future generations requires long term strategic thinking. It is only by actively engaging in wealth planning that families can plot a course that ensures the preservation of their legacy, not only in terms of maximising wealth but also establishing the values that will stand the test of time and create a positive impact in the world. SCB Julius Baer brings forth our expertise with a team of investment advisory experts who are experienced and certified by Julius Baer’s wealth management standards. We are ready to provide advisory services to our esteemed customers and equip them with knowledge to assess the returns on their investment portfolios, in order to pass on wealth to the next generation in a sustainable way.”


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