Luxury goods retailers are being forced to look beyond the traditional central London streets for sites due to a lack of space and spiralling rents, according to leading property advisor BNP Paribas Real Estate.
The surrounding streets adjacent to the traditionally prestigious and affluent locations such as New Bond Street, Old Bond street and Sloane Street, demonstrate the most potential for growth, the company said. Luxury retailers are continuing the emerging trend to open stores in streets such as Bruton Street, Mount Street and Brook Street, BNP Parabas Real Estate reports. Local ‘cut throughs’ and the arcades of Mayfair and St James are enjoying a renaissance, particularly amongst the destination luxury brands.
BNP Paribas Real Estate’s head of retail, Patrick Heaps, said: “According to research, the global luxury market is set to grow by 57% to $499.3bn by 2015 and we believe London will be a key beneficiary of this growth. Even despite the on-going problems in the UK economy, London’s international appeal as a top global shopping destination hasn’t wavered, with visitor numbers remaining high, especially post-Olympics, and sales values continuing to grow.”
This continued popularity is partly down to high-spending shoppers from the Middle East, Russia and China, who currently account for more than 40% of all overseas transactions in central London, said BNP Paribas Real Estate. As a result, luxury brands have bounced back strongly from the depths of the downturn, as affluent consumers rekindle their confidence in luxury consumption.
Interestingly, the quality of fashion retailers in retail sub-markets has also evolved. Almost 80% of Bond Street and 70% of Knightsbridge stores are now home to luxury retailers. Whilst Regent Street and Covent Garden has shown an uplift in luxury brand presence, the greatest emphasis has shifted towards ‘upper middle’ retailing.
“The central London luxury market is an established global market and has continued to be dominated by a demand and supply imbalance, which has prompted retailers to look for suitable space in newer, less established locations. In turn, this has led to a change in the retail mix which we have seen take place over the last three years,” said Heaps.