Savills’ ” Global Luxury Retail 2025″ report shows that the global luxury industry has maintained steady growth momentum despite economic challenges.
In 2024, key markets will see strong growth in rental prices, with over 75% of the 21 surveyed areas reporting increases or stable rental prices for prime space.
After a slowdown in 2023, new store openings rebounded last year, rising 12% globally. In 2024, China remains the main driver, accounting for 40% of new stores worldwide, down slightly from 41% last year.
Asia leads growth
In terms of volume, the Asia-Pacific region (excluding China) was the biggest bright spot, accounting for 24% of global new stores and officially surpassing North America and Europe. Within the region, Japan maintained its position as the leading market in terms of new store openings.
As predicted in early 2024, the recovery of international tourism has helped Alpha Cities and emerging destinations regain their prominence. This urban re-concentration is also driven by the density of wealthy populations – a group of customers with purchasing power that is resilient to economic fluctuations. This is clearly reflected in the impressive business results of many ultra-luxury brands such as Chanel and Hermès.
Anthony Selwyn, co-head of global retail at Savills, said: “Luxury brands are taking a long-term strategic view, adjusting their portfolios to be closer to their customers. Immediately after the pandemic, when international tourism declined, brands stepped up their efforts to exploit domestic markets with great potential but lacking points of sale. This trend will continue, but at the same time, competition in traditional markets will become increasingly fierce, as prime locations and quality premises will become key factors. Therefore, rental pressure in these areas will remain, although the pace may be slower due to increasingly limited supply of premises.”
The three Asia-Pacific Alpha Cities of Shanghai, Beijing and Tokyo will take the top three global spots for new stores in 2024. All three will see significant growth compared to 2023, with Hong Kong (No. 9) and Singapore (No. 5) continuing to make the top spots.
London leads Europe in rental prices
Hong Kong’s Tsim Sha Tsui district remains the top destination for global luxury brands, with rents still averaging €17,132 per square meter in 2024 despite downward pressure on rents. Madison Avenue in New York and Bond Street in London both moved up the rankings, taking second and third place respectively, after ranking fifth and fourth last year. Bond Street is now the most expensive location in Europe, at €15,333 per square meter, overtaking Via Monte Napoleone in Milan, which was the top spot in 2023 at €15,000 per square meter.
Tokyo ranked fifth with rents in Ginza at 13,406 euros per square meter. Singapore ranked 19th with a price of 1,725 euros per square meter.
Marie Hickey, Director of Commercial Research at Savills, added: “The stabilisation of the luxury market, which began in late 2024, will continue to consolidate this year. However, weak consumer sentiment in the US and China will act as a drag on growth and will impact short-term real estate investment strategies as brands focus on the best opportunities.”