It’s no wonder luxury is all about the Far East these days. Asia is clamoring for luxury like no other region.
Largely driven by all the new wealth being created in Asia and its insatiable appetite for luxury goods, Asia is a luxury seller’s dream market where demand has outpaced supply and prices can be raised without slowing demand.
Swiss bank Julius Baer recently released its first Lifestyle Index that tracks luxury inflation. For the following four markets — Hong Kong, Singapore, Shanghai and Mumbai — the Baer Index of luxury goods is up 11.7% (7.2% in local currency).
Much of the price increase comes from significantly higher consumption in Asia, while production is holding steady. “Lafite isn’t making more bottles of claret, nor is Laboutin pumping out more pumps,” writes Bruce Upbin of Forbes.
To get a sense of the ‘scarcity’ of luxury goods, which inevitably elevates exclusivity, if you want to buy a Patek Phillippe, you have to be personally approved by the company’s CEO and Chanel is limiting new customers to one bag before they get into a deeper relationship, according to what one Julius Baer banker told Upbin.
Luxury goods prices can vary significantly among Asian countries. Baer also tracked these differences. For example, “a Mercedes S500 in Singapore costs US$400,000, 69% more than it would cost in Hong Kong. A Chanel handbag in Singapore costs almost 60% higher than in Hong Kong while Louboutin shoes are 2.8 times the price. Shanghai and Mumbai are cheaper for most items, except for the Steinway grand, which costs $240,000 in Shanghai but only $177,900 in Hong Kong.”
The largest inflationary categories are wine, wedding banquet, handbags, travel (airline), piano, and travel (hotels).
Education is the least inflationary item — boarding school is up 4.6% and university tuition rose 2.8%. This could be that schools and university are generally located in the West where inflation is lower.
Here’s the list of luxury goods and their price change year over year.
photo credit: chanel