Dubai is no longer among the top 10 most expensive cities globally for the ultra-wealthy, as its cost of living remains competitive compared to major global cities, a report has found.
The city ranked 12th globally, a drop from seventh position last year, with the UAE dirham’s peg to the US dollar helping to keep inflation in check, the report by Swiss private bank Julius Baer said.
Dubai also ranked as the sixth most expensive city in the Europe, Middle East and Africa region (Emea) for high-net-worth individuals to live a luxury lifestyle.
“Despite remaining a very wealthy city, Dubai has dropped in both regional and global rankings, making it relatively more affordable compared to other Emea cities,” the bank said.
“Dubai’s stable and attractive market conditions have kept it competitive on the global stage.”
Meanwhile, the Emea region has become the most expensive for the super rich to live well, after ranking as the cheapest region in last year’s report, according to the latest findings.
The rise in ranking this year was driven by London taking third spot and every European city moving up the ranking, as well as strong exchange rates versus the US dollar, the report added.
Over the past 12 months, the price growth of all goods and services in the Julius Baer Global Wealth and Lifestyle index slowed to 4 per cent on average in USD terms, compared with 6 per cent in 2023.
Prices grew faster for goods than services this year, with goods up 5 per cent on average and services up 4 per cent, both in USD terms.
The report used a basket of consumer goods and services that represent discretionary purchases by HNWIs – defined as people with a net worth of $1 million or more – including watches, luxury handbags, business-class airfares and property, and analysed prices in 25 cities around the world.
“In the Middle East, spending was concentrated on luxury goods such as clothing and watches, but most significant of all was the demand for luxury residential properties,” the report said.
While HNWIs in the Middle East focus on premium products such as designer clothing, jewellery, luxury watches and real estate, those in Europe and Asia-Pacific focus on hospitality (five-star hotels, top restaurants).
Luxury spending in the Americas appears to be spread across all categories, it added.
Inflation, rising living costs and increased geopolitical tensions continue to affect prices globally.
But although cities continue to become more expensive, there has been a normalisation of inflation rates over the past 12 months, the bank said.
Inflation is expected to average 3.5 per cent this year and 2.9 per cent in 2025, but the pace of decline is slower than projected six months ago, according to a recent report by the World Bank.
UAE: A millionaire magnet
A record 6,700 millionaires are expected to call the UAE their new home by the end of this year, a survey this month by international investment migration advisory firm Henley & Partners found.
The country’s luxury lifestyle, golden visas and low tax environment have helped the UAE retain its place as the world’s wealth magnet for the third year running.
The country is poised to attract nearly twice as many millionaires as its nearest rival, the US, which is forecast to see 3,800 millionaires settle there by the end of the year.
“Although the impact of the global pandemic has now settled into a new normal, inflation, rising living costs and increased geopolitical tensions have not had as much of an impact on Dubai as on other markets, which have contributed even more to its appeal for wealthy residents,” the Julius Baer report said.
Prominent global hedge funds, asset managers, FinTech companies and family offices are establishing regional offices in Dubai, making it a premier destination for the global elite, it added.
“The region’s wealthy are spending the highest currently on luxury residential properties compared to any other region, amid strong economic growth and world-class infrastructure,” the research found.
“Even though the residential market has sustained an upward trajectory in prices, residential property is relatively affordable compared to many cities in the region.”
More than half of wealthy Middle Eastern respondents said they had spent more on residential property in the past 12 months.
Planned spending is equally high, with 58 per cent saying they will spend more in the coming 12 months. No other region comes close to this, the report found.
The index revealed that the ultra-rich in Dubai and across the Middle East are bullish in their investment outlook with primary goals of wealth creation, increasing assets and boosting their portfolios.
Globally, Singapore was ranked the most expensive city for HNWIs, followed by Hong Kong and London.
Meanwhile, the Asia-Pacific ranked as the second most expensive region for HNWIs to live well, due to lower rankings for cities like Tokyo, Julius Baer said. The Americas fell to last place.
In all regions, HNWIs invested more in the past 12 months than in the year before, according to the Swiss bank.
Top 12 most expensive cities for HNWIs in 2024
1. Singapore
2. Hong Kong
3. London
4. Shanghai
5. Monaco
6. Zurich
7. New York
8. Paris
9. Sao Paulo
10. Milan
11. Sydney
12. Dubai