While it would be hard to say they’re “feeling the pinch” in the way the average person would think about money, the lifestyle of Chinese millionaires is getting more expensive as the costs of property, high-quality healthcare, education, weddings, and luxury goods are on the rise.
The Hurun Report’s 10th annual Luxury Consumer Price Index released last week finds that luxury prices have seen their fastest growth in five years for China’s elite. The survey includes the property, goods, and services they’re buying both at home and abroad, and features a list of examples of items actually purchased by Chinese HNWIs in the past year including an Azimut yacht for RMB99.6 million (US$14.9 million) and a Vertu rose-gold phone for RMB340,000 (US$51,000). The overall price of all 124 goods and services evaluated has grown by 5.1 percent over the past year, with property, health, and education causing the biggest increase.
The prices of luxury property for Chinese buyers both in China and abroad increased by 13 percent, according to the report, with particularly high growth in Chinese property-buying hotspots Vancouver (28 percent) and San Francisco (17.9 percent). While many are buying abroad in fear of a property bubble on the mainland, they’re still upping their property spending at home: Shenzhen took the global lead for luxury housing price growth with a 57 percent increase.
The report also finds that “an increasing health awareness of high-net-worth individuals” has caused them to spend more on high-quality healthcare, with an 11.7 percent increase. Included in the “healthcare” category are cosmetic procedures, such as the “L’Avion Anti-aging Placenta Extract Tour to Switzerland” that one rich individual went on for RMB428,000 (US$64,245).
The cost of a quality education for their children is another big source of spending increases for China’s rich, especially the growing number sending kids abroad at earlier ages. While tuition fees in China are for the most part “stable,” according to the report, tuition is going up at elite international schools such as Philips Academy Andover in the United States and Eton in the UK.
While 60 percent of list entries saw price increases in the past year, China’s HNWIs are getting “bargains” on some luxury items, however. The cost of luxury liquor, tobacco, and automobiles has declined for two years in a row as China’s anti-corruption campaign continues, with high-end baijiu prices still in a slump. While entertainment and leisure is on an uptick overall, wealthy golfers can find some good deals amidst the government’s golf crackdown: for example, the cost of one round at the Spring City Golf Resort in Yunnan went down by 33.6 percent last year, now costing less than US$300.
As for luxury items, both the “watches and jewelry” and “accessories and skincare” sections saw increases of 3.9 percent and 2.9 percent, respectively. While watch and jewelry prices generally increased, accessories prices saw more fluctuation, with the cost of a Louis Vuitton Speedy bag staying the same at RMB10,500 (US$1,576) and a Hermès scarf declining 9.3 percent to RMB3,400 (US$510). Some iconic goods are stronger then ever, with the cost of the illustrious Hermès Birkin handbag—a favorite among China’s elite—increasing to RMB450,000 (US$67,544) for a crocodile-skin version.
While the cost of luxury living isn’t getting cheaper, China’s 1 percent can certainly afford it—a recent Capgemini report found that the total value of wealth held by HNWIs in the Asia-Pacific region has surpassed that of North America for the first time, thanks in large part to China.