China is forecast to become the world’s biggest economy by 2028, but its commercial capital is already there: Shanghai is now the most expensive city in the world.
Such is the amount of private wealth in Shanghai that exclusive purchases there are now more expensive than anywhere else in the world, including Hong Kong, the former world’s most expensive city.
These purchases include “degustation” dinners, lawyers and business class flights, according to Julius Baer, which looked at the cost of “a basket of goods and services that reflect the HNWI lifestyle.”
The Swiss bank wants to know what its clients—the super-rich—buy and how much it costs them in various cities around the world. Among its curious findings was that treadmills are more expensive in Shanghai than anywhere else, but health insurance is cheaper. London is the most expensive place for Lasik and New York for hotel rooms.
But behind such bizarre findings is a broader movement. Shanghai is the world’s most expensive city because there are now a lot of very rich people living there.
Shanghai has shot up this week’s Forbes billionaire rankings. It now has the sixth largest concentration of billionaires in the world having ranked 18 last year.
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There is also a fashion revival, obvious to anybody in Shanghai right now as the city celebrates is much delayed fashion week. The event is now such an occasion for the industry that the fashion website Jing Daily said Shanghai was giving “fashion capitals like London a run for their money.”
In this year alone, Shanghai plans to open 49 shopping malls with each sized over 30,000 square meters (322,917 square feet).
Knight Frank, has tipped Shanghai’s Hongqiao CBD as the destination to watch. The new business center is “the biggest of its kind ever seen in China,” says the real estate consultancy.
Shanghai is “to the 21st century what New York and San Francisco were to the 20th and London and Paris were to the 19th,” says Julius Baer’s Global Lifestyle report.
But what of Hong Kong, the city Shanghai stole the “world’s most expensive” title from? It goes into third place behind Tokyo.
Having once been a shopping destination for wealthy Chinese tourists, now few venture to Hong Kong to spend their wealth.
The last two years of pro-democracy protests put many off the special administrative region. But now mainland Chinese shoppers have all the luxury shops they need at home. Plus, Julius Baer says, Hongkongers are “less interested in high-profile labels as indicators of status.”
Hong Kong does at least beat Taipei (5) and Monaco (4) in Julius Bear’s ranking. But this in itself is revealing: Apart from Monaco all of the top five, and most of the top ten most expensive cities are Asian.
U.S. and European cities, on the other hand, have become cheaper, largely thanks to an exodus of their wealthy residents to the countryside over the past year. Prime real estate markets in both London and New York struggled last year as wealthy buyers headed for the hills. As a result, both cities are cheaper than a year ago.
It is the very opposite of what is going on in China and other Asian countries whose cities have weathered the Covid-19 pandemic in better shape. But, that, as this study shows comes at a cost.