The current Savills Global Luxury Retail 2025 Report shows that global luxury retailers continue to withstand economic challenges and record the core markets for 2024 a strong rental growth. In over 75 percent of the 21 regions examined, the top rents rose in comparison to the year or remained stable.
After the number of new openings slowed down in 2023, this trend reversed last year. Twelve percent more new businesses were opened worldwide. In 2024, China also remained the draft horse worldwide with a share of 40 percent of all new openings, although this proportion decreased from 41 percent compared to 2023.
Asian space grows the strongest
The largest growth region in relation to the number of shops was the Asian-Pacific area without China. The region made up 24 percent of all new openings worldwide, overtaking North America and Europe. Without China, Japan remained the largest market for new openings in the region.
As predicted for 2024, the return of international travel has led to global alpha cities and minor destinations have become more important again. The realignment of global alpha cities is also underpinned by the greater concentration of wealthy private individuals in these markets. Their expenses have proven to be more resistant to the current downturn, which is reflected in the strong performance of a series of ultra luxury brands such as Chanel and Hermès.
Anthony Selwyn, Co-Head, Global Retail, Savills, comments: “Luxury brands clearly pursue a long-term strategic market look and adapt their portfolios to move closer to their customers. Immediately after pandemic, we have observed that brands are increasingly concentrating on large, wealthy and relatively under-the-detect markets. Trend will continue, but we will also experience an increasing competition in our core markets for luxury goods, whereby the quality of the buildings and the location will be of great importance.
The global alpha cities in the Asian-Pacific area-Shanghai, Beijing and Tokyo-took the first three places at the new openings of shops in 2024. All three recorded an increase in new openings compared to 2023, as did two other global alpha cities in the region, Hong Kong (9th place) and Singapore (5th place).
London has the highest shop rents in Europe
Hong Kong’s district of Tsim Sha Tsui kept his top position as the most important luxury travel destination. Despite the downward pressure on the top rents, rents for luxury properties in 2024 were 17,132 euros per square meter per year. The Madison Avenue in New York and the Bond Street in London rose to second and third place in the ranking after they were in places five and four last year. With 15,333 euros per square meter, the London Bond Street now has the highest indicative rental rent in Europe and thus overtakes the Milanese via Monte Napoleone (15,000 euros per square meter), which took first place in 2023. Tokyo is fifth with top rents in Ginza from 13,406 euros per square meter. Singapore took the 19th with peak rents of 1,725 euros per square meter
Marie Hickey, Director, Commercial Research, Savills, adds: “The stabilization of the development of the luxury market that began to emerge at the end of 2024 will continue to strengthen in the course of this year. However, the weak consumption mood in the USA and China will burden growth and shape the real estate investments, whereby the focus will continue to be up to date.”