MANILA, Philippines—Prices of luxury goods in Manila climbed in 2020 while the pandemic took its toll on the local economy, but Swiss wealth manager Julius Baer sees a growing market in the Philippines as it recovers from the recession.
Julius Baer’s Global Wealth and Lifestyle Report 2021 released last Friday ((April 9) showed Manila was the 16th-most expensive city for high-net-worth individuals in 2020 among 25 cities covered.
Shanghai was the most expensive city, followed by Tokyo and Hong Kong. “Asia continues to be the most expensive region in the world for high- and ultra-high-net-worth individuals—a testament to the continent’s ongoing rise,” Julius Baer said in a statement.
It said prices of luxury items in Manila rose by 9 percent in US dollars in 2020 which was 8 percent faster than the average in cities covered by Julius Baer’s lifestyle index.
Julius Baer’s lifestyle index “takes a basket of goods and services that reflect the high-net-worth individual’s lifestyle—ranging from residential property to laser eye surgery,” it explained.
Manila’s lifestyle index outpaced national headline inflation, which in 2020 averaged a slightly higher 2.6 percent from 2.5 percent in 2019.
But Julius Baer still considered Manila an “attractively priced Asian destination” like Bangkok, Jakarta and Mumbai.
On a per commodity or service basis, the report said men’s suits, women’s bags and whisky were the most expensive in Manila across the 25 cities.
Also, road bikes were second-most expensive in Manila—“a punishing city to commute in because of its sprawl” and “despite a relatively low level of sales tax.”
Manila “is the most expensive place to buy exclusive fashion,” Julius Baer said.
“It is not cheap to travel either: locals are paying over the odds for cars, bicycles, and business-class flights, which have seen a 63-percent rise in US dollar terms,” it said.
“The prices of wine and whisky are also rising steadily, as the government slowly increases duty on all alcohol,” Julius Baer said.
On the flip side, Julius Baer found that lawyers’ fees were the cheapest in Manila.
“Property is also affordable. The residential sector has stayed relatively buoyant, despite the COVID-19 crisis, because of the high levels of digital inclusion in the Philippines,” Julius Baer said.
“Estate agents moved swiftly to take advantage of online viewings and digital payments,” Julius Baer said.
But no thanks to COVID-19, Julius Baer noted that the Philippines as a whole was “experiencing a cocktail of economic pressures because of the pandemic and strict containment measures, which have severely affected livelihoods and consumer spending, resulting in a deep recession last year.”
Gross domestic product (GDP) fell by a record 9.6 percent last year—the worst post-war recession.
Julius Baer was nonetheless bullish about Manila and the Philippines as they rebound from the pandemic-induced economic slump.
“As in many other cities across Asia, Manila’s citizens are major consumers of cosmetics and fragrances: this sector is worth $600 million out of the overall $1.3-billion luxury goods sector in the Philippines,” it said.
“This healthy market will result in compound annual growth in luxury goods of around 8 percent over the next five years,” it added.