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May 212 min read

Luxury Retail Market: Key Trends and Insights for 2024

Savills Global Luxury Retail Report Reveals Evolving Landscape

The latest edition of Savills' Global Luxury Retail Report delves into the current state of the luxury retail market, exploring topics such as store expansion strategies, emerging luxury hubs, market trends, and the growing interest of luxury retailers in acquiring real estate assets.


Post-Pandemic Slowdown and Regional Diversification

Following two years of robust growth, the global luxury retail market experienced a natural slowdown in 2023. New store openings in regions like Europe and China decelerated, while markets like North America and Asia Pacific (excluding China) witnessed a surge of nearly 20% in new luxury store openings. Interestingly, expansion seemed to favor vacation destinations over major urban centers, despite both facing challenges in securing suitable retail spaces.


Fashion and Accessories Dominate, Jewelry on the Rise

As in previous years, fashion and accessories brands led global expansion in 2023, accounting for 63% of total new store openings. While new store openings slowed across most luxury retail categories, jewelry brands bucked the trend, experiencing a 30% year-on-year increase in new store openings.


Promising Markets for Luxury Retail

The most promising luxury markets remain the world's largest and wealthiest cities, such as New York, Los Angeles, London, Paris, Seoul, and Tokyo. However, several emerging locations stand out for their potential growth in the next five years, driven by factors such as increasing affluence, a growing resident base, and an underdeveloped luxury goods market. These include cities in China and the Middle East, where rising living standards, untapped potential, and a burgeoning tourism industry create a significant opportunity for the luxury retail market.


Luxury Brands Embrace Real Estate Investments

Unlike mass-market and even premium brands that typically lease retail spaces, luxury brands have become significant players in the real estate investment market. In 2023, luxury brands collectively acquired over €6 billion worth of properties, a trend expected to continue in 2024. This shift is partly driven by the rising rents for prime retail spaces, which range from €125 per sqm per month in Lisbon to €1,250 per sqm per month in Milan, and exceed €1,500 per sqm per month in Asian markets like Hong Kong. In Bucharest, a city with limited high-street retail space on Calea Victoriei, the average rent is €55 per sqm per month.


Luxury Retail in Romania: A Budding Market

Romania's luxury retail market is still in its early stages of development. The success of this segment is closely linked to the luxury real estate market, as the presence of high-end residential or hotel projects significantly increases the likelihood of luxury retail brands entering the market. By 2028, Romania is expected to see 13 new five-star hotels open, including prestigious brands like Mondrian, Hyatt, and Kempinski. In the residential sector, while no branded residence projects have been delivered in Bucharest yet, collaborations with luxury brands for finishes and furniture have been announced for projects under development.



New Entrants and Positive Outlook

Specifically, in the retail sector, the Hermès group recently announced its intention to open its first store in Bucharest, and Tesla plans to open a dedicated showroom in the near future. These new market entries, coupled with sustained economic growth, create a promising environment for the expansion of luxury retail brands in Romania.



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