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18 July 2024

Dubai catapults to seventh rank in Julius Baer’s Global Wealth and Lifestyle Report owing to the strong rebound in hospitality, tourism, and real estate sectors

By E247

– According to the fourth edition of the Global Wealth and Lifestyle Report, the overall trend in the past 12 months is that prices are rising, and the cost of living is increasing for all consumers. The average price of Julius Baer’s Lifestyle Index has increased by 6% in US Dollar, but by 13% in local currencies. Broadly, this is due to persistent high rates of global inflation and the fact that raw materials, energy, fuel, and staffing have all become more expensive. Moreover, consumer demand, pent up over the pandemic, has increased dramatically.

The city ranking is based on the Julius Baer Lifestyle Index which analyses the cost of a basket of goods and services representative of ‘living well’ in 25 cities around the world. This provides an overview of the relative cost of maintaining a high-net-worth lifestyle in various major urban centres.  

Regional findings
Asia reaffirms its dominance as a centre for wealth and lifestyle, as well as an essential driver of the global economy. Overall, six cities in Asia rose in the rankings, while four fell; seven Europe, the Middle East, and Africa (EMEA) cities fell in the ranking, with only one rising (Dubai); and in the Americas four cities rose and one fell. This is some of the most movement seen in the past three years but has left us with one of the most evenly spread top ten global city rankings in the report’s history. The secondary tale is not just an American resurgence – it is also Europe and the Americas jockeying for second place while Asia, which has a clean sweep of the top three, powers ahead. 

For the first time, Singapore is the highest-ranking city in the Lifestyle Index, followed by Shanghai – last year’s leader – and Hong Kong in 2nd and 3rd respectively, making up a fully Asian podium. Taipei is the only other Asian city to feature in the top ten, taking the 8th spot.

For the first time since the report began, EMEA is the most affordable region in which to live well, with European cities in particular dropping down the rankings. London, last year’s 2nd place, falls to 4th, and, apart from Monaco holding firm in 6th, Britain’s capital is the only European city in the top 10. Dubai has enjoyed a rapid rise up the ranking to 7th place, helping to relegate Zurich to Dubai’s former position of 14th. 

In the Americas, New York makes a significant climb to 5th place from 11th and Miami rises eight places to 10th, while the Brazilian metropolis of São Paulo breaks into the top ten for the first time in 9th place. Santiago de Chile, newly added to the Index this year, joins in 23rd place. This return to form of both North and South American urban centres results in the Americas overtaking EMEA as the second most expensive region in which to live well.

Dubai: the star performer 
Dubai has enjoyed a rapid rise in the ranking to seventh place, relegating Zurich to Dubai’s former position of 14th. The Emirate, perfectly positioned as a gateway between east and west, continues to grow as a hub that appeals to hyper-mobile wealthy people.

This climb up the rankings means it is costing wealthy residents more to maintain their lifestyles – the city became the most expensive in EMEA for eight of the 20 Index items, notably across fashion and luxury accessories, while globally it is the second most expensive city for watches. 

Dubai remains an object lesson in the saying ‘build it and they will come’, and a testament to the power of government to create hubs using financial and other incentives. It has become the place that companies and entrepreneurs seeking a base in the Middle East (ME) turn to and is popular with expatriates. Additionally mega events such as Expo 2020 and the upcoming COP28 continue to play an important role in solidifying Dubai’s footprint on the world map. 

The emirate is also an increasingly important centre for wealth management, purportedly having seen the greatest inflows of millionaires of any country in 2022. By offering a friendly tax regime and investment incentives, high standards of living, safety and security for its residents, good global connectivity and infrastructure, Dubai looks set to remain a fixture in the higher end of our city rankings.

Most recently, it has seen the relocation of large numbers of wealthy individuals, which has affected property prices and demand. The report reveals that prime residential property in Dubai rose by 44% – the highest increase observed across all cities – it is still relatively affordable on a global scale, ranking 14th out of 25 cities. Significant local and international demand from ultra-high-net worth individuals has boosted the prices of premium homes in Dubai. The city is taking a proactive but practical approach to attract wealthy residents and their assets, particularly with the golden visa scheme for long-term residency. 

The report also highlights that prices for hotel suites have rebalanced since 2022. Social experiences are having a resurgence, fine dining prices increased by 186% reflecting a strong rebound in Dubai’s hospitality and tourism sector. Dubai International Airport increased its annual passenger forecast for 2023 after hitting 95.6% of its pre-pandemic levels of traffic in the first quarter of this year. 

Fahd Abdullah, Executive Director, Investment Advisory, Julius Baer (Middle East) Ltd., said: “Dubai has firmly set its sights on becoming one of the top four financial centres in the world. This is further cemented by the recent announcement of the Dubai Economic Agenda – D33 that aims to double the size of its economy in the next decade”. He added, “With such exponential growth and subsequent wealth transfer through further influx of entrepreneurs and business owners, we see the rise of a next generation of clients with a keen focus on sustainability seeking exposure to innovative trends like genomics and artificial intelligence. As a wealth manager, Julius Baer is well poised in the region to cater to these developments.” 

Julius Baer Lifestyle Index
The greatest price increases are in high-demand, premium consumables such as wine and whisky, as well as luxury cars and hospitality services. Hotel suites, business class flights, and fine dining all experienced significant price increases as the demand for travel and entertainment has surged. Across the board, price changes of both goods and services in the Index show the impact of increased energy, raw material, and staffing costs. Coupled with inflation, currency fluctuations, and ongoing supply chain disruption, these conditions mean that every industry, business, and consumer is feeling the effects on their purchasing power. 

Christian Gattiker, Head of Research, Julius Baer, commented: “Price rises in premium goods and services underpin the case that wealthy consumers need to achieve a high single-digit investment return in US dollar terms to preserve their wealth. These findings also support the insight that solid currencies and, in particular, assets denominated in such currencies (e.g. the US dollar or Swiss Franc) can help to weather these storms and secure a healthier, wealthier future.”

Lifestyle survey findings
This year’s Lifestyle Survey has been expanded to include North America, Singapore, and Qatar, and asks more in-depth questions about health and wellbeing, sustainable practices, and financial situations.

Overall, it shows that wealth is no longer only about financial health, freedom, and security but also physical health, freedom, and security. Having come through the pandemic, respondents listed their and their families’ health as one of the top priorities. Improving nutrition, taking time to recuperate and relax, and raising fitness levels have all been highlighted.  

This ‘future proofing’ of body and mind also extends to building better relationships with family and friends – a high priority in all regions – and creating a secure and efficient home environment in which to live and work, though how this manifests varies from region to region. 

Taking care of family and health does not mean that HNWIs just want to stay at home. After several years of being constrained in what they can do and where they can go, they – like everyone else – are ready to enjoy themselves. This means increased demand for entertainment, hospitality, and social experiences which is backed by increasing prices via our Index. 

With travel restrictions no longer an issue, HNWIs around the world are on the move again. Travel for both leisure and work is on the up and respondents are increasingly spending on flights.

Another key finding in this year’s Lifestyle Survey is a stronger consideration of sustainability and ESG matters in investment decisions, with the vast majority of HNWIs in all regions now considering them important. 

Finally, in all regions, at least a quarter of respondents stated that they invested more during 2022 than in the previous year. A significant proportion have also spent more in the past 12 months. This indicates that even the wealthy are not cushioned from rising living costs, and that they are deploying recently accrued capital.