Having experienced a slowdown in 2023, luxury store openings across the world are expected to rebound in 2025. With consumer spending appetite returning during the year, more properties are expected to become available during the year, according to a forthcoming report from international estate agents Savills.
The report recommends, luxury brands expand beyond capital cities and popular leisure destinations, and consider opening stores in emerging affluent regions across China, India, and Dubai.
Anthony Selwyn, Co-Head-Global Retail, Savills, emphasises, widening of the global luxury landscape will uncover new opportunities for retailers, encouraging them to further engage with their customers.
Despite a 13 per cent year-over-year decline in global luxury store openings in 2023, certain regions showed resilience as brands mostly targeted domestic audiences.
Luxury store openings in the Asia-Pacific region increased 31 per cent Y-o-Y, accounting for 17 per cent of global openings, during the year. This growth was led by China with 41 per cent of the global store opening. However, this pace later slowed to 12 per cent Y-o-Y due to weaker demand and fewer real estate opportunities.
Driven by higher tourist spending, a weaker yen and relaxed visa restrictions for the Mainland Chinese tourists, Tokyo and Singapore together accounted for 40 per cent of the store openings in the Asia-Pacific region
New stores across North America also boomed with New York leading with 12 per cent Y-o-Y growth compared to the previous year. This was followed by store openings in Los Angeles and other affluent cities, and leisure resorts around Atlanta, Dallas, Chicago, and Aspen.
However, store openings across lagged with a 17 per cent Y-o-Y decline in openings, primarily due to limited availability in key luxury streets after an 83 per cent surge in 2022.
Marie Hickey, Director-Commercial Research, Savills, attributed the 2023 slowdown to a normalisation after a significant post-pandemic expansion, particularly in China. She noted weaker consumer confidence and spending in China, coupled with availability constraints in prime luxury locations in Europe, North America, and the Middle East. Hickey expects this trend to continue into early 2025.
Despite the challenges, luxury brands continue to optimise their real estate portfolios, particularly in future growth markets in Asia and the Middle East. However, larger luxury groups with mature store portfolios are expected to be more selective in their expansion strategies.
Savills identified cities underserved by luxury brands relative to their market size and wealth. In China, cities like Shenzhen, Hangzhou, and Wuhan offer significant potential due to their growing affluence and lower occupational costs, compared to more saturated markets like Shanghai and Beijing. Other promising markets include Mumbai, Delhi, Jakarta, Bangkok, and Dubai, which all exhibit significant growth and affluence yet remain relatively underrepresented by luxury brands.
