Savills: global luxury retail sees rental growth & more openings

Global luxury retail continues to weather economic headwinds, with core markets reporting strong rental growth and more new store openings in 2024, according to a new report from Savills.

Over 75% of the 21 luxury retail destinations tracked in the report reported annual increases or a hold in prime headline rents YoY.

“Luxury brands are clearly taking a longer-term strategic view of the market and are recalibrating portfolios to get closer to their consumers”, said Anthony Selwyn, Co-Head of Global Retail, Savills. “We will see our core luxury markets become increasingly more competitive, with building quality and pitch being of the upmost importance. As a consequence, upward pressure on prime rents in these markets will continue but growth will slow, as availability of space is becoming more constrained.”

New York and London bucked the wider trend to report their strongest growth since the onset of the pandemic. In 2024, London’s Bond Street reported a 20% uplift in prime headline rents – with growth across New York’s Madison Avenue and Fifth Avenue averaging 24%.

New York’s Fifth Avenue strengthened its position to become the most expensive retail destination in the world – with prime headline rents at €26,000 per sq m, per annum as of Q4 2024, although rents are still not back to 2019 levels.

New York’s Madison Avenue and London’s Bond Street moved up the rankings to come in second and third, having ranked fifth and fourth respectively last year. As a result, London’s Bond Street now has the highest indicative prime rent in Europe at €15,333 per sq m, overtaking Milan’s Via Monte Napoleone (€15,000 per sq m), which held the top spot in 2023, although there is little between them.

Following the slowing in new store openings in 2023, last year bucked the trend with a 12% increase in new store openings globally, but Savills expects this to slow in 2025, particularly in China, with brand focus over the short term to be on the best opportunities. In 2024, China remained the powerhouse, accounting for 40% of all new openings globally – with a 10% year-on-year increase, although this is down from a 41% global share in 2023.

Beyond China, the biggest growth region in store count terms was the wider Asia Pacific region. Accounting for 24% of all new openings, accelerating past North America and Europe, with a 52% increase in new openings. Excluding China, Japan remained the biggest market for new openings in the region, with Savills research pointing to the strength of domestic and visitor spend, particularly that coming from China.

“The stabilisation in the luxury market’s performance that started to materialise at the end of 2024 will become more entrenched as this year progresses”, said Marie Hickey, Director, Commercial Research, Savills. “Weakened consumer sentiment in the US and China, however, will weigh on growth, and will shape real estate investment, with the focus over the short term to remain on the best opportunities.”