Seeking more bang for their bucks, super-rich splashed out US$1.8tr last year

Bored with their usual treats, the super wealthy splashed out US$1.8 trillion last year on new status symbols like art and extreme holidays

PUBLISHED : Monday, 03 February, 2014, 4:11am
UPDATED : Monday, 03 February, 2014, 5:56am

They say money can't buy happiness, but the world's super rich are still giving it their best shot.

Last year they spent US$1.8 trillion on luxury goods and services - with extreme holidays, gourmet dining and art auctions emerging as the status symbols du jour.

Whether that means spending a record US$142 million on a Francis Bacon triptych or diving with sharks, the rich are increasingly hunting for unique objects and experiences, sometimes laced with the thrill of danger.

Perhaps jaded by regular visits to plush boutiques in Hong Kong or Paris, the world's millionaires are increasingly preoccupied with spending on the kind of things that money - usually - can't buy, says a report by the Boston Consulting Group (BCG).

"Luxury is shifting rapidly from 'having' to 'being' - that is, consumers are moving from owning a luxury product to experiencing a luxury," said BCG senior partner Antonella Mei-Pochtler. "They already have the luxury toys; the cars and the jewellery."

Of the US$1.8 trillion spent on luxuries last year, an estimated US$1 trillion went on services - from private airline flights to luxury slimming clinics, to a five-star hospital stay where the patient will be waited on by a butler and the en suite facilities include a marble bathtub.

Luxury spending was slightly more than the wealth controlled by the poorest half of the world's population - 3.5 billion people. Oxfam recently estimated their combined wealth at US$1.65 trillion in a report on inequality, where it pointed out that this sum was the same as the wealth controlled by the world's richest 85 billionaires.

A breakdown of last year's figures shows US$460 billion was spent on one-of-a-kind travel adventures such as expeditions to the Antarctic or bespoke safaris, while US$170 billion was spent on the more typical trappings of wealth: designer clothes and handbags.

Other growth areas include fine art and wine, which are seen to be attractive alternative investments to the stock exchange.

One Chinese multimillionaire, according to the report, spent US$1.5 million on a two-year tailor-made package holiday that took in nearly 1,000 Unesco heritage sites.

His son, meanwhile, not content with adding a second Piaget watch to his collection, spent his vacation diving with hammerhead sharks.

The son is an example of what BCG dubs the "sugar generation", a label used to describe China's affluent young consumers who, against a backdrop of a booming economy, have grown up surrounded by luxury brands.

This group accounts for 13 per cent of China's affluent population, a figure that is expected to reach 30 per cent within five years as the "wealth history" of the average Chinese family becomes longer.

The scars of the 2008 banking crisis mean demand for luxury goods and services is not quite back at the heady level seen before the fall. But BCG predicts the luxury market will still grow 7 per cent this year.