Entrepreneurs, sports stars and foreign billionaires are spending more than ever on luxury services.
Private banks and wealth managers say clients are moving beyond traditional luxury goods in search of services that will save them time and enhance their life experience.
Wealthy individuals who are largely immune from the effects of the credit crunch, and are still happy to spend, are splashing out on private jets, concierge services, butlers, personal trainers, shoppers and stylists, as well as properties fitted out to lavish standards.
“There is still an enormous amount of wealth being spent,” says Charlie Hoffman, senior director at HSBC Private Bank. “To some extent, our clients are cushioned from recession and we haven’t seen them stop spending.”
He says the super-rich have been snapping up luxury services that will save them precious personal hours.
“People’s interest in philanthropy and diversification into different assets, such as having property in different countries, means they have less time. Anything time-
saving is therefore very attractive,” he says.
Hoffman has seen clients spending more on private jets and concierge services in particular. “Anything that means they don’t have to hang around,” he says.
Recent research from Barclays Wealth showed that the use of private jets is set to increase significantly over the next year, as is the demand for personal
bodyguards and live-in fitness trainers and life coaches.
Gerard Aquilina, head of international private banking at Barclays Wealth, says people are increasingly using their wealth as a means to gain empowerment and control, rather than just to build assets.
Two-thirds of respondents to Barclays’ latest survey said wealth had brought them more time, but also more stress. They saw time as the ultimate luxury and were happy to buy in services that enabled them to enjoy their lives.
Of the respondents with assets of at least $3m, almost 80 per cent employed a butler and a chef, more than three-quarters used a personal stylist and more than half consulted a personal shopper, personal trainer, dietician and travel consultant.
“Evidence from our research suggests that time is one commodity that is at an increasing premium as individuals climb the wealth ladder,” said the report. “Demand for ‘time-substitute’ services among the wealthy is growing rapidly.”
Marquis Jet, a provider of private jet hire, has seen a 15-20 per cent increase in global demand year-on-year. Kenny Dichter, chief executive, believes this is being driven by the “tremendous wealth creation” among elite individuals and companies, as well as an increased practical need because of airport delays and security fears.
“Private jets used to be looked at as a luxury but are now a practical necessity,” he says. “They are now ubiquitous for people with $10m to $20m – they are part of the package.”
Marquis Jet offers 25-hour “cards”, which also buy you a pilot and fuel, and allow you to go anywhere you like for that block of time. Prices range from $119,900 to $399,900 excluding taxes, depending on the type of aircraft you hire. The group runs its own carbon offsetting programme for those with a green conscience.
Wealthy individuals are also becoming more demanding when it comes to their own homes. Hoffman says clients are paying out an “enormous amount” to ensure they have sufficient privacy by buying large plots of land and installing high-tech security measures.
Nicholas Candy, of Candy & Candy, the interior design and development company, says clients have been installing top-of-the-range safes, as well as bullet-proof and bomb-proof windows and high-tech security systems, some of which include sensors that are set off when artwork is moved.
But the ultra-wealthy are still splashing out on luxuries that cannot be so easily passed off as the new necessities.
Clients of Candy & Candy have requested temperature- controlled underground parking with padded walls – known as a “jewel box for the Ferrari” – a swimming pool which, at the push of a button, turns into a dance floor, a dining table that becomes a roulette wheel, moving projection wallpaper that has trees that blow in the breeze and birds that fly away when they are touched and bespoke “intelligent mirrors” which provide a 360- degree video of you with a time delay freeze-frame function.
“The difference with luxury today is that it is now about the experience – the service – whereas before it has been very product-
orientated,” says Nicholas Candy.
He says the wealthy expect exceptional service and are still willing to spend – as long as they are getting the best of the best.
Candy & Candy has found that demand for ultra high-end central London apartments – those in Belgravia and Knightsbridge costing £10m-£30m – has been ”second to none” even throughout the credit crunch.
“We are mainly dealing with multi-billionaires. For these people this climate presents an opportunity to pick up things for cheap,” he says. Around 80 per cent of the group’s buyers are from overseas, he says. Many are entrepreneurs, or oil and gas investors.
Barclays’ survey found that the wealthy are increasingly striving for exclusivity – hence the demand for these one-off services rather than traditional luxury goods, which are now accessible to the mainstream market.
Barclays found that the richer the individual, the more he or she considered exclusivity an important factor when making purchasing decisions.
“This is the challenge of luxury services,” says Aquilina. “When something becomes more available it loses its cachet. People want something unique.”
But the rich are not just spending their money on services to ease the pressure of their own lives. They are also increasingly giving to charity and philanthropic causes.
“Our large clients are really looking at philanthropy and how they can use their money to change things – not just collect assets,” says Hoffman.