Stonehage Affluent Luxury Living Index» (SALLI)

SALLI | STONEHAGE AFFLUENT LUXURY LIVING INDEX
SWITZERLAND | 2011
INDEX RESULTS
SWISS LUXURY LIVING COSTS RISE 1.2% DESPITE STRENGTH
OF SWISS FRANC
Switzerland/London, 11 October 2011: The Stonehage
Group, a leading Multi Family Office advising Ultra High Net
Worth (UHNW) individuals and international families, today
announced that typical luxury goods and services purchased
by UHNWs based in Switzerland increased on average by 1.2%
in the 12 months to the end of August 2011. This compares
to the previous two consecutive years of deflation of 6.2%
based on the same basket of luxury goods and services.
The increase measured in the 2011 edition of Stonehage’s
Affluent Luxury Living Index (SALLI) Switzerland, compares to
an inflation rate of 0.2%, measured by the Consumer Price
Index (CPI) over the same period.
The cost of luxury living increased, despite the continuing
strength of the Swiss Franc against leading currencies which
cut the price of many high-end goods for consumers. The
currency linked price reductions of imported goods were
counteracted by steep rises in living costs in Switzerland
particularly in terms of the rental market.
During the year the Swiss Franc strengthened against the US
Dollar by 21.1% and against the Euro by 10%, harming Swiss
business exports and prompting the Swiss National Bank to
peg the Swiss Franc against the euro.
KEY FINDINGS INCLUDE:
• UHNW inflation is much more volatile than the standard
rate of inflation, as measured by the CPI, tending to exceed
standard inflation in good times and significantly fall short in
times of downturn.
• Residential property rentals in Geneva and Zurich increased
substantially during the year, with Zurich rentals edging
ahead of those in Geneva for the first time since the survey
began in 2007. Zurich rental prices rose by 12% against a 4%
rise in Geneva which agents attributed to population growth
in the two cities which according to official statistics[1] have
been 1.6% and 1.1%, respectively.
• The increase in the prices of rental property contributed to
a rise of 6.8% in the housing and family category.
• The biggest decrease identified this year was in the travel
sector where prices dropped by 5.6%, as the cost of luxury
holidays fell by as much as 20% because of the strength of
the Swiss currency. Private air travel dropped in price by 9%,
again because of currency fluctuations.
• Luxury consumables prices were also lower than the
previous year, showing an overall fall of 4.7% as prices on
imported goods such as cigars fell by 10%, as did the prices
of fine wine and champagne which dropped by 4% and 11%,
respectively.
• The investments of passion category, which includes cars,
jewellery and art, showed a very small increase of 1.1%.
Decreases in the prices of imported luxury items such as cars
were neutralised by a rise in art prices which were up by 8%.
• Generally prices in the culture and entertainment category,
which included prices for the Montreux Festival and the
Geneva Opera House, showed little or no movement.
However, the price of a top-end lake boat rose by 5% which
contributed to a 2.7% rise in this category overall.
• While the VAT rate increased marginally by 0.4% on 1st
January 2011, the impact on SALLI was minimal, with many
businesses appearing to absorb the charge rather than
increasing prices.
• Without the currency appreciation, SALLI would have
shown an inflation figure of 5.3%, a reflection of the large
increase in the residential property rentals and inflation in
the price of goods and services from outside Switzerland.
If the Swiss National Bank’s Euro currency peg had been
in place prior to the date on which the SALLI prices were
collected, SALLI would have been 2.4%.
Mark McMullen, Executive Director of the Stonehage Group
in Geneva, commented: “Once again the strong Swiss Franc
has played a critical role in the value of SALLI this year,
generally leading to reductions in the prices of luxury goods
and services. However, domestic housing costs have risen
sharply adding to inflation for the wealthy and the Swiss
National Bank’s decision to peg the Swiss Franc against the
Euro is likely to add further to general inflationary pressure.”
1 Office of Federal Statistics, Switzerland
1 SALLI | STONEHAGE AFFLUENT LUXURY LIVING INDEX | SWITZERLAND 2011

EXECUTIVE SUMMARY
The Stonehage Affluent Luxury Living Index (SALLI®)
was first published in 2007 in order to measure the
inflation experienced by UHNW individuals and families
living in London. We believe it was the first Sterlingbased
index of its kind and following strong interest
from clients and UHNW families Stonehage published
SALLI® Switzerland in 2008.
SALLI® Switzerland is a proxy for price inflation
experienced by Swiss-based UHNW families. It measures
a basket of luxury goods and services regularly purchased
by UHNW families. The basket consists of approximately
50 goods and services on a ‘per use’ weighted average
basis. It includes items such as annual tuition and
boarding fees for two children, Zurich and Geneva rental
costs for a family property, a family ski holiday to St
Moritz, fine wine and cigars.
Prices in the index are the recommended retail prices (incl.
VAT) and SALLI® accounts for the frequency of purchase
of each item over one year. Prices were recorded between
2006 and 2011 2 . For the purpose of this study we have
assumed that the basket comprises items purchased by an
UHNW family of two adults and two children.
The index methodology was originally developed by Professor
Geoffrey Wood of the Cass Business School in London and
the same methodology has been used each year.
Prices for SALLI® Switzerland were gathered in August
2011. Where applicable, exchange rates are as at 31
August 2011. The majority of price quotations are CHF
based. The basket of items has been updated to ensure
it remains accurate and relevant.
2 Prices for SALLI Switzerland were collected in August of each year.
Price inflation between 2006 - 2011
Year SALLI CPI
2006 - 2011 (total increase) 1.2 3.1
2006 - 2011 (annualised) 0.2 0.6
Source of CPI figures: Swiss Federal Statistical Office (Dates used: 8/06, 8/07, 8/08, 8/09, 8/10
and 8/11 figures rounded to one decimal place.
Year on year changes in the indices from 2006 - 2011
Year SALLI CPI
2006 - 2007 9.9 0.5
2007 - 2008 4.9 2.9
2008 - 2009 -6.2 -0.8
2009 - 2010 -6.2 0.3
2010 - 2011 1.2 0.2
Source of CPI figures: Swiss Federal Statistical Office (Dates used: 8/06, 8/07, 8/08, 8/09, 8/10
and 8/11); figures rounded to one decimal place.
Price increase or decrease per spending category
Category
Price increase or decrease
between
2010 - 2011 (%)
Consumables -4.7
Investments of Passion 1.1
Culture, Entertainment
& Recreation
2.7
Housing & Family 6.8
Travel -5.6
All Items 1.2
SALLI ® SWITZERLAND VS. CPI (2006 – 2011)
10%
8%
6%
4%
2%
0%
-2%
-4%
-6%
-8%
0.5%
9.9%
2006/2007
2.9%
4.9%
2007/2008
-0.8%
-6.2%
2008/2009
0.3%
2 SALLI | STONEHAGE AFFLUENT LUXURY LIVING INDEX | SWITZERLAND 2011
-6.2%
2009/2010
0.2%
1.2%
2010/2011
3.1%
1.2%
2006-2011
CPI
0.6%
0.2%
SALLI
2006-2011
annualised

ABOUT STONEHAGE
OVERVIEW
Stonehage is a leading independent Multi Family Office offering wealth management and advisory services to an
international clientele. Stonehage works with clients to protect and enhance their wealth across jurisdictions and
generations. Our interests are aligned with those of our clients.
Stonehage is owned by management and staff with twelve offices around the world. Established in 1976, the Group
currently employs over 375 staff and manages the affairs of over 1,000 client families internationally. Stonehage was
awarded the Family Office of the Year award in 2009 by the Society of Trust and Estate Practitioners.
www.stonehage.com
COMPONENT ITEMS OF THE SALLI INDEX 2011
1. CONSUMABLES
Food
Prunier Heritage Caviar
Balik Salmon
Sprüngli Chocolate Truffles
Smoking Cigars - Trinidad Funadadores
Drink
Restaurants
Cigars - Cohiba Esplendidos
Liv-ex 100 Fine Wine Index
Liv-ex 25 Champagne Index
Le Loti at La Réserve, Geneva
La Perle du Lac, Geneva
Auberge du Lion d’Or, Geneva
Petermann’s Kunststuben, Zürich
Kronenhalle, Zürich
Kaiser’s Reblaube, Zürich
2. INVESTMENTS OF PASSION
Cars
Watches
Top of the range Porsche Cayenne
Top of the range Aston Martin
Rolex Cosmograph Daytona, white gold
IWC Portuguese, with rose gold
Jewellery Piaget Hearts Collection
Art Artprice Global Index
Clothing
Hermes Birkin bag
Burberry woman’s trench coat
Perfume Clive Christian “X” perfume
3

COMPONENT ITEMS OF THE SALLI INDEX 2011
3. CULTURE, ENTERTAINMENT & RECREATION
Culture
Charity Balls
Sports
4. HOUSING & FAMILY
Housing
Monthly residential rent for prime property in Geneva (Source Wüest & Partner)
Monthly residential rent for prime property in Zürich (Source Wüest & Partner)
Health Appointment at private GP
School Annual tuition and boarding fees
Flowers Bouquet of flowers from Marsano, Zürich
Household Staff Full time housekeeper from Bonne Ménagère
Hairdresser Woman’s hair appointment from 2B For Hair, Zürich
5. TRAVEL
Transport
Accommodation
Private Transport
Tonhalle-Orchestra tickets, Zürich
Opera House tickets, Geneva
Opera House tickets, Zürich
Lucerne Festival tickets
Montreux Jazz Festival tickets
Table at Bal de la Croix Rouge, Geneva
Table at Opera House Ball, Zürich
Club de Genève Eaux-Vives annual tennis memberships
Ski pass, St Moritz
Ski pass, Verbier
Ski instructor, St Moritz
Omega European Masters ticket
Evian club de fitness annual memberships
Club de Veytay annual polo membership
Boating Classic Boesch lake boat
Return first class TGV tickets from Geneva to Paris
First class return flight from Zürich to New York
A weekend at the Four Seasons Hotel George V, Paris
A weekend at Claridge’s Hotel, London
A weekend at Hotel Plaza Athenee, New York
Two week holiday at Hotel Byblos, St Tropez
One week holiday at the Badrutt’s Palace Hotel, St Moritz
One week holiday in a chalet, Verbier
NetJet 25-hour private card valid for a Light Jet
Luxury limousine service
DISCLAIMER: This publication is intended to provide only general information and to highlight points of interest. It is not intended
to be comprehensive or sufficient for making decisions and should not be relied upon. Specific professional advice should be sought
on the facts of any matter before action is taken.
4 SALLI | STONEHAGE AFFLUENT LUXURY LIVING INDEX | SWITZERLAND 2011