London's luxury market on expansion trail

With the London Olympics upcoming and an ever growing number of international and middle eastern tourists into the UK capital, London’s luxury market is on an expansion route, which will lead to increased real estate rents. According to the

latest research by BNP Paribas Real Estate, accelerated growth in the luxury goods market will lead to the emergence of new locations synonymous with high end brands resulting in increased Zone A rents and higher values.
 
Research by Real Estate firm, BNP Paribas, illustrates a growth spurt in the luxury market post recession led times and estimates further growth of 57% by 2015. Furthermore, research highlights prime retail sites and the new premium prices retail occupiers are now willing to pay. Case in point: Alexander McQueen who has agreed to open a 4,500 sq ft store at Dover Street on a 15 year lease with a quoting rent of £300,000 per annum and Fendi, who has taken a flagship store and European HQ building on New Bond Street for a £1.7m premium from Mallet Antiques. They also anticipate that the former Molton Brown store at 58 South Molton Street, which is currently being marketed,
will set a new Zone A rent beyond the current level of
£350 per sq ft.
 
Domenica Scordo, retail analyst at BNP Paribas Real Estate said: “London’s retail property market has experienced strong growth driven by international retailers competing for space with the market remaining dominated by an imbalance in demand and supply which is  prompting retailers to look for suitable space in newer, less established locations.”
 
Other key areas, the research suggests looking out for, include Albermarle Street and Dover Street, located next to Old Bond Street, and therefore perfect for diffusion lines, such as Hugo Boss Orange and Ralph Lauren Rugby.
 
Shoreditch is also highlighted by BNP Paribas Real Estate’s research as a potential luxury fashion destination with a number of retailers such as Christian Louboutin and Ralph Lauren keen to tap in to the well off market.
 
Michael Sheridan, director of Central London retail at BNP Paribas Estate said: “Shoreditch’s combination of low rents, a young professional working population as well as an eclectic mix of retail, hotels, bars and restaurants make the area attractive to luxury retailers, as brands lend themselves to this trend driven area.
 
“In addition to Shoreditch, the relocation of the US Embassy to Battersea will improve the value of both residential and commercial property in the Grosvenor Square area as redevelopment by Qatari Diar/ Chelsfield will deliver high quality residential, retail and catering provision and is therefore a potential luxury goods location.”