Shanghai and Singapore are Asia’s most expensive cities while China’s luxury market slows

According to the most recent Julius Baer survey, Shanghai is now Asia’s most expensive city to buy six of the 22 items that the survey measures. In addition, it has grown more expensive, on a relative basis, to buy property (from fifth to fourth most expensive), and legal fees have increased from 10th to second.

Shanghai is the most expensive city to buy the following six items: A hospital room, handbags, jewelry, skin cream, watches and wine.

Singapore is the most expensive city to buy: a car or a degustation dinner, and ranks in the middle of the list on every other item. It’s best result was eighth place for a piano.

In Hong Kong, business class airfares and property prices have distorted the city’s position on the list – they are more expensive there than in any of the other cities that were ranked. However, Hong Kong is the cheapest city to buy skin cream, the second cheapest for wine and jewelry and the fourth cheapest for men’s suits, women’s shoes and watches.

Kuala Lumpur, Malaysia’s capital is the region’s least expensive city. According to Julius Baer, it is the most competitive city to rent a hotel suite or to buy cigars, jewelry, a piano, real estate property and wine. The price deflation of onshore items, such as legal fees (down four spots) and jewelry (down three spots) offset a recovery in the value of the ringgit against the US dollar.

Chinese luxury consumption declining

Meanwhile, the report says the “China express” driving the world’s luxury retail market is slowing. Chinese nationals accounted for just 2% of luxury spending in 2003 yet in 2017 that share had soared to 32% – and they account for more than 70% of global growth. But Julius Baer says recent signs “are pointing to an outlook that will be less spectacular”.

The Julius Baer report said that: “Amid the ongoing trade conflict with the US and a softening growth dynamic, the Chinese stock market has come under significant selling pressure this year.” The report also notes that: “Chinese consumer confidence, which has been a good leading indicator for luxury goods performance trends, appears to have rolled over. The weakness in Chinese consumer confidence has weighed on the sector of late, and is likely to remain a drag going forward if Chinese consumption trends continue to slow.”

“We believe China is going through a self-induced slowdown as the economy transforms from investment-led to consumption-led growth. Reforms are currently taking a back seat in favor of selective and measured easing but [we] still expect 6.5% growth this year, before a slowdown to 6.2% next year.”

“Following a strong recovery since 2015, it is reasonable to expect global luxury consumption to slow in the near-term from a high base and moderating Chinese demand. Yet we remain upbeat in the longer term premised on structural growing demand from Chinese millennials and a more prominent female presence in the luxury market.”