Global luxury goods spend has grown faster than expected in 2017 with Bain & Company forecasting a 6% increase in personal luxury goods revenue by the year end, with robust annual growth of 4–5% through to 2020. Much of this rebound is being driven by Chinese consumers and is likely to translate into improved demand for new stores in key Chinese cities. Cities in the wider region that attract significant numbers of Chinese tourists such as Hong Kong and Macau, should also see new store requirements increase. Globally however, we expect new store requirements to remain focused on strategic and under-represented markets in Europe and North America.

Expansion by ‘affordable luxury’ brands will continue to form a key part of the overall luxury market in 2018 with the major destination markets being prime targets for these brands. As this is a segment that can support multiple brand stores in a given city we expect occupational demand to improve particularly in those markets most adversely impacted by the luxury headwinds of 2016.

The greater focus on strategic and under-represented markets for 2018 is reflected in active requirements across the 30 luxury brands that Savills track. In Europe, Frankfurt and Munich are top target cities for new store openings with Paris and London also featuring in the top five. In terms of global requirements it is US markets that dominate. Miami, New York and Los Angeles all feature heavily in brands target cities for 2018/2019. In the case of New York this suggests that the occupational headwinds it faced this year will start to abate in 2018.

Savills Luxury Retail Highlights