Factors such as increasing geopolitical tensions and rising inflation have impacted the spending patterns of investors and made them more conscious about securing their financial future. However, the UAE, Dubai in particular, still demonstrates versatility and diversity to lure the high-net-worth-individual (HNWI) tourists to the country from across the globe, according to a new report released by Switzerland-based private banking company Julius Baer.
Julius Baer tracks prices and consumer behavior around the world to gauge the price inflation of a basket of goods and services representative of the HNWI lifestyle in cities around the world.
The survey takes a closer look at the lifestyle of global HNWIs, offering a deeper understanding of their consumption, spending, and investment habits.
The Lifestyle Survey of HNWIs reveals regional differences in how optimistic respondents feel about their personal, professional, and financial futures. It indicates a strong intention to return to experiential spending on leisure activities and travel, but also a greater focus on areas that might enable them and their children to plan in the years ahead, such as health insurance, wellness, and education.
Another trend is how HNWIs are increasingly aligning their financial and investment decisions more closely with their personal values. In all regions, sustainability is a very, if not extremely, important consideration for most respondents. HNWIs generally want to promote sustainability through investments, which is why Environmental, Social, and Governance (ESG) plays an increasingly important role when it comes to investment decisions.
The pandemic, combined with a challenging set of macro-economic conditions and supply chain disruptions, has caused price rises for 75 percent of the goods and 63 percent of the services in the Julius Baer Lifestyle Index.
The weighted average of prices increased by 7.46 percent in the last year, compared to an increase of only 1.05 percent in the previous edition of the report.
The analysis observes that the inflation has resulted in an increased focus on where HNWIs are located – stability, security, and cost of living have all become decisive factors. Additionally, HNWIs have a stronger desire to do more with their own wealth and go beyond purchases to have a positive impact on society. Sustainability, ESG, and philanthropy considerations continue to grow in importance.
Dubai: the region’s global city
Moreover, the report showed that UAE demonstrates versatility and diversity to lure tourists to the country from across the globe. The study suggests that the Middle East has far greater potential for change for cities featured in the Index and it could be anticipated that Dubai could be joined by Doha or cities of Saudi in the future. This year Dubai takes the 14th spot on the Index as business activity in Dubai’s non-oil private sector economy showed a marked growth in the emirate’s travel and tourism sector, despite rising inflationary pressures.
When it comes to hotel rooms, Europe, the Middle East, and Africa (EMEA) is the outlier, with overall price increases of almost 50 percent. This is also due to truly price increases in Dubai with +195 percent year-on-year, 2nd strongest increase after London driven by a surge in visitor numbers. With smart strategies, tempting staycation offers, and several major events staged in the UAE, the hospitality sector appeared upbeat, according to Julius Baer’s report.
Despite differing pandemic restrictions, the report shows that Dubai continued to receive tourists during 2021 – driven by a combination of pent-up demand as travel reopened, the effect of Expo 2020 Dubai and increased staffing costs have driven price rises in accommodation. The city also witnessed a 44 percent growth in residential property prices with short-term rentals and holiday homes on an upswing. Overall, Dubai’s residential market saw an increase in line with the trend in 2021 and properties were also relatively affordable, despite a significant rise in 2021. Continued growth in transaction volumes, strong demand for off-plan properties, and new project launch supported to support the residential market.
Julius Baer’s Global Wealth and Lifestyle report which assesses HNWI spending intentions for the coming year has highlighted that Middle East respondents intend to spend almost equally on health and fine dining as well as leisure accommodation. Within the EMEA region, Dubai is the most expensive city to buy a car (20 percent higher than the regional average) but also a men’s suit and a watch.
