MAPIC: 'Phenomenal' growth in Asian tourism drives luxury retail in Europe

The strong growth of tourism from Asia, particularly China and India, is a key driver of the outperformance of luxury retail in Europe, David Hutchings, head of research at Cushman & Wakefield EMEA, told a panel discussion at the Mapic retail fair in Cannes this week. 'The growth of the sector is not just cyclical, it is structural. Luxury is becoming less of a niche.'

Luxury retail property continues to perform strongly in Europe with rental growth for space in top luxury shopping streets up 4.5% over the year to June 2012, a new report from Cushman & Wakefield reveals (click on the link at the bottom of the page for more on the report).

Rental growth in these 'super streets' has outpaced the growth seen on Europe's most expensive high streets which were up 1.7% on average and widened the gap with the mass market which saw just 0.5% growth.

In Europe, Paris, London and Milan lead the way in terms of luxury retail destinations, Hutchings added. 'Asia has a number of top cities but Europe has the most depth.' Overall, he said, Europe has 14 cities that are key destinations for luxury retailers including Zurich, the big six in Germany and Moscow.

The potential for further growth of the luxury sector across Europe is enormous, noted Pierre Raynal, head of retail agency at Cushman & Wakefield France, pointing to the expected influx of Chinese and Indian tourists. 'The forecasts for tourism in France are incredible,' he said. Between 2010 and 2020, global spending from Chinese tourists is expected to grow to $64 bn, reaching $100 bn in 2020 alone.

While various members of the panel described the growth of the luxury sector as 'phenomenal', Hutchings tempered expectations that the current 'astronomical' growth would continue indefinitely. At present, growth levels in excess of 50% are being reported, but this will drop back to 8-10%, he predicted.

Click on the link below to read: 'MAPIC: Demand for luxury goods drives rental growth'