European luxury store openings are on the rise, and London’s Bond Street has emerged as a hotspot for new luxury boutiques. Despite the challenges posed by the ongoing pandemic, the luxury market in Europe experienced a significant recovery in 2022. According to a report by property specialist Savills, there was a 77% increase in store openings across Europe last year as the continent welcomed back international visitors and witnessed a surge in luxury spending.
The Savills Global Luxury report revealed that Europe accounted for 23% of global new luxury store openings, placing it second only to China and ahead of North America. This revival in the luxury market was driven not only by the rebound in luxury spending but also by the decrease in rents on key luxury streets and the improved availability of prime retail spaces. For instance, London’s Bond Street saw a decline of 27% in indicative prime headline rents between December 2019 and December 2021. Although rental growth has now returned, rents remain 17% below pre-pandemic levels as of Q1 2023.
Globally, there was an overall 11% increase in new luxury store openings in 2022, outperforming the wider retail sector. China maintained its dominance, accounting for 41% of all new luxury openings. However, the total number of luxury store debuts in China declined compared to 2021, likely due to weakened occupier confidence caused by rolling lockdowns in certain areas. In contrast, other regions in Asia witnessed an increase in luxury store openings, with their global share rising to 12%. Markets with growing high-net-worth populations, such as Vietnam, attracted luxury brands and contributed to the region’s growth.
The Middle East also emerged as a growth region for luxury store openings in 2022. This under-served market, with its affluent consumer base, saw its share of global new luxury openings double to 6%. Dubai remained a primary focus for luxury brands, but Saudi Arabia also became a key player.
Marie Hickey, commercial research director at Savills, pointed out that while traditional luxury markets like Milan, London, and New York will always be attractive to luxury brands, availability challenges in these markets will likely limit activity in the next 12-18 months. As a result, luxury brands are increasingly open to exploring new locations outside the top-tier cities. Hickey expects new store activity to continue expanding in these emerging markets.
London, in particular, stands out as a thriving luxury market in Europe. Bond Street has experienced a significant influx of luxury store openings. Anthony Selwyn, co-head of the Prime Retail team at Savills, highlighted the appeal of London as a luxury retail destination. He emphasized that Bond Street, with its major development projects, played a crucial role in attracting luxury brands. The redevelopment project at the northern end of Bond Street, led by GPE, has created a suitable home for luxury brands stretching from Piccadilly to Oxford Street. Interestingly, the most central part of Bond Street has become the most sought-after location for luxury fashion brands. Gucci recently secured a relocation to this prime spot, and other luxury brands like Moncler and Off-White are following suit, with many more seeking new premises in this segment. Despite falling rents overall, the high demand and limited supply in the central part of Bond Street are expected to drive rent increases in the coming years.
In conclusion, the luxury market in Europe is seeing a rebound, with European cities witnessing a surge in new luxury store openings. London’s Bond Street, in particular, is experiencing a renaissance as a hub for luxury brands. As the luxury market continues to recover and evolve, luxury brands are exploring new locations beyond the traditional luxury capitals, setting the stage for further expansion and growth in the industry.
Useful links:
– Savills
– Bond Street
