Billionaire's Playground: Singapore Is The Most Expensive City Globally
The world’s most expensive city might make you think of sky-high Manhattan property prices. Or perhaps dinner at Tokyo’s many Michelin-starred restaurants. But actually, Singapore – the Asian city-state smaller than Manhattan – is the world’s priciest, according to a new report by the Economist Intelligence Unit (EIU).
Singapore beat 131 cities to earn this title – overtaking Tokyo, Paris, Oslo and private banking hub, Zurich. The nation ranks first in cost of cars, spurred by the high “Certificate of Entitlements” to own a car, that are currently just below S$80,000 (US$ 60,000). Transport costs in Singapore are almost three times higher than in New York. It also holds third position globally for prices of utilities. Expensive malls and boutiques on Orchard Road (Singapore’s retail hub) import luxury European brands to satisfy a wealthy and fashion conscious consumer base, according to the report. The nation is now the costliest place in the world to buy clothes.
Singapore’s Business District, which houses many of the private banks that have attracted the world’s wealthy to Singapore. Manfred Gottschalk/Getty Images
Rising income inequality in Singapore
Despite boasting many ultra-rich residents, the exorbitant prices are not affordable for everyone living there. Singapore has recently come under scrutiny for its rising income inequality. A BBC report said the city-state boasts the second-biggest inequality gap among Asia’s advanced economies. Being ranked the world’s most expensive city is an unenviable position. Just 10 years ago, a bottle of table wine would cost US $13.25 in Singapore. Current prices are nearly double that at $25.65. The hight cost of living has spurred passionate debates about a “poverty problem” in the city-state. Despite government subsidies for housing for Singaporeans, many are unable to afford their own homes. However, the EIU report maintains that Singapore’s rise has been steady, not stratospheric, citing a 40 percent currency appreciation and solid price inflation over a decade as Singapore’s driver in the rankings.
“Like many countries that have experienced economy-wide bubbles and busts – including the U.S. from 2003 to 2007 – Singapore currently has a ballooning credit bubble that is helping to drive economic growth and create an illusion of prosperity. Ultra-low interest rates are the primary reason why credit bubbles inflate in the first place, and Singapore’s bubble is no exception to this pattern.”
“Singapore has large current account (broad trade) surpluses in its balance of payments. This allows it to build up its foreign reserves and investments (e.g. the cushion of a huge amount of wealth in its SWFs). The country has a strategic location, low corruption, and skilled people so it will continue to be a hub for South East Asia,” says finance professor Jeff Rosensweig, Director of the Global Perspectives Program at Emory University’s Goizueta School of Business.
“The warning of a bubble by Jesse Colombo made me pause and showed me some risks, but I’m still betting on Singapore.”
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