High-net-worths across the globe are spending more on leisure travel, fine dining and luxury hotels as they prioritise pursuing pleasure post-pandemic, a new report has found.
This growing trend reflects a desire among HNWs to indulge in lifestyles reminiscent of the post-war economic booms of the ‘Roaring 20s’, according to the Julius Baer Global Wealth and Lifestyle Report 2024.
This spending boom is fuelled by financial optimism. Some 70 per cent of respondents reported increased assets over the last 12 months. Wealth creation ranks highly on priority lists across all regions, particularly in the Middle East and across Asia Pacific.
The report, which provides a comprehensive overview of the evolving priorities and behaviours of HNWs, highlights regional trends and global shifts in consumption, investment, and sustainability.
[See also: UK to see exodus of millionaires as HNWs ‘vote with their feet’]
The index also tracks how much it costs to live 'extremely well' in cities across the world, using a 'basket of goods' including the cost of a lawyer, private school and business class travel. London is the third most expensive city, driven by a stronger pound and rising cost of living across the board, falling behind Singapore and Hong Kong.
Regional divisions
Across all regions surveyed, HNW spending across travel, fine dining and hotels has increased year-on-year and is projected to rise further in 2024.
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The greatest price increases this year are for premium consumer items such as fashion and jewellery, where pricing has been rising steeply for several years, according to the index. The only significant drop this year on a global level in USD terms was the demand for bicycles, with small drops for whisky and business class flights.
Health is wealth Asia Pacific
Emerging from harsher lockdown restrictions, Asia Pacific regions witnessed the most growth in spending over the last 12 months. Almost three-quarters (74 per cent) of HNWs reported increased spending on five-star hotels, only slightly more than the 71 per cent splashing out more on fine dining.
[See also: Where do the super-rich live? World’s wealthiest cities 2024 revealed]
Health is also a major new sector for HNW spending, with almost two-thirds of respondents reporting an year-on-year increase.
‘APAC was either first or second in terms of increase in every health sub-category,’ the Julius Baer report notes. ‘In some, this was very stark — 63 per cent of HNWs in APAC said their discretionary spending on health expenses had risen over the past year, while only 37 per cent of Europeans and North Americans said theirs had.
‘This is likely to be down to healthcare and wellness being seen as a ‘new luxury’ to a greater degree in the APAC region, with 63 per cent saying they are concerned about their health and wellbeing, the highest level of any region.’
Luxury leads in the Middle East
In contrast, Middle Eastern HNWs demonstrated a particular focus on luxury goods such as clothing, watches and smartphones. Spending on women's designer clothing, shoes and handbags increased by 58 per cent, 57 per cent and 55 per cent, respectively.
Property also remains a leading driver in spending. More than half of survey respondents in the Middle East said they had spent more on residential property in the past 12 months, and planned spending is equally high, with 58 per cent saying they will spend more in the coming 12 months - far higher than any other region.
Europeans seek experiences
In a trend reflected in data from across the travel and hospitality sectors, European HNWs are placing greater value in luxury experiences in the post-pandemic years. More than half (54 per cent) of respondents reported spending more on fine dining, which leads the sectors ahead of luxury hotels at 52 per cent. 'Fine wine' was the third biggest source of increased spending, with 40 per cent of Europeans allocating more money to their collections.
Slower spending growth in North America
The outlier is North America, where only 30 per cent of respondents said they spent more than the previous year. Health and wellness saw the greatest increase in spending (37 per cent spending more), followed by hotels (33 per cent), fine dining (32 per cent), fine wine (32 per cent) and personal computers (30 per cent).
‘However, this is against a very positive background,’ the Julius Baer report authors note. ‘North America also had the highest percentage of recipients who said they’d spent less than the year before, but this figure was only 13 per cent; elsewhere it was close to 7 per cent.’
Sustainability can’t outdo a big name
Sustainability and environmental concerns have not fully permeated HNWs' personal lives and spending decisions, the Julius Baer report illustrated. Sustainability ranks low among considerations when they are making buying decisions. Instead, brand history, prestige, and innovative design are top factors in all regions. Only in APAC does sustainability make the top five, while in Latin America, collaborations with famous artists or celebrities are prioritised over sustainability.
[See also: The Roaring Twenties: Why London is in a ‘golden decade’ for super-prime property]
This contrasts sharply with investment behaviour, where ESG considerations are significant, especially in APAC and Latin America, where 80 per cent and 83 per cent respectively aim to have a positive impact through their investments. In North America, however, ESG is more contentious, with only 43 per cent prioritising it and 35 per cent actively disagreeing.
