LONDON – Despite a new Labour government that’s eager to regulate private business and tax the wealthy, London continues to thrive as a retail and property hot spot, and to attract high-end customers, according to the luxury industry lobby Walpole.
In their second annual “State of London Luxury” report, Walpole and property owner Cadogan describe the British capital as a “leading global hub” for luxury goods.
The report was published as part of Walpole’s Culture month, which coincides with the opening of a host of art, design and antiques fairs, including Frieze, Frieze Masters and PAD.
“London’s secret as a global luxury capital is its slick, dynamic blend of creativity, culture and luxury,” said Helen Brocklebank, chief executive officer of Walpole, a not-for-profit organization that represents 250 brands ranging from Burberry and Alexander McQueen to Rolls-Royce and Glenfiddich.
The city, she added, is “unique, and appeals to affluent residents, high-value visitors, retailers and international investors alike. The key to success, both in today’s tighter market and into the future, lies in luxury’s role as a cultural innovator, and in its ability to authentically and cannily engage with the zeitgeist.”
According to the report, London’s luxury retail landscape is thriving, with investment volumes rising by 71 percent year-on-year in the second quarter of 2024 to total 424 million pounds. The expectation is that full-year investment volumes will exceed those of 2023.
Companies have not only been purchasing property and opening stores, they’ve also been increasing the size of their holdings in prime locations.
Dior‘s supersized Sloane Street London store.
Courtesy of Dior/Jonathan Taylor
The report said that since the start of 2023, all of the retailers that moved addresses on Bond Street have upsized their spaces by an average of 195 percent.
Sloane Street, which runs from Chelsea north to Knightsbridge, has also seen a surge in interest from luxury brands, due chiefly to Cadogan’s 50 million pound investment in the area. Valentino, Jessica McCormack and Temperley London have already opened, or are planning to open, flagship stores on the street.
Bottega Venetta, Brunello Cucinelli and Saint Laurent have already upsized their spaces on Sloane Street, which is part of the 93-acre Cadogan Estate in Chelsea.
There is also a trend for luxury brands to purchase, rather than lease, prime London properties, especially in Mayfair.
The report said that LVMH Moët Hennessy Louis Vuitton’s acquisition of the Dior store space at 160-162 New Bond Street “further underscores confidence” in London’s long-term status as a luxury capital. The French luxury giant purchased the space for 165 million pounds in 2022.
Luxury brands have also been investing in personal shopping services, exclusive in-store offerings, and immersive experiences. As customers return to brick-and-mortar stores, many brands are investing in staff expertise, and “local curation and place making.”
Despite macroeconomic uncertainty, and the loss of tax-free shopping in the U.K., the report said that some 66 percent of respondents remain optimistic about their business prospects going forward.
Another key driver of London’s success is “high-value” tourism, with visitors eager to immerse themselves in the city’s history, culture and arts scene.
Claridge’s Spa and swimming pool.
Courtesy of Claridge’s
In 2023, the U.K. welcomed 38 million overseas visitors, a 22 percent increase from the previous year, with Heathrow Airport reporting a 29 percent rise in international passengers, and approaching pre-pandemic levels, the report said.
Hoteliers have been responding with gusto, with 20 luxury hotels set to open by 2028. There has also been an increase in “super-luxe hotel rooms” across the city, and a snappier service offering, too. According to the report, staff-to-guest ratios in some hotels are now as high as three-to-one.
High-spending tourists outspend their mass-market counterparts by 14 times per trip. In addition, for every 1 pound spent by high-value tourists, a further 8 pounds of value is generated across the U.K., which supports a wide variety of industries, skills and employment.
The city is attracting, and maintaining, private property investors despite the government’s plans to crack down on tax breaks for high net worth individuals who are living in the U.K. part-time.
According to the new research, London is home to more than 227,000 high net worth individuals, making it the wealthiest city in Europe, and driving “significant demand” for luxury goods, property, and services.
Sales of properties in London priced at 15 million pounds and above surged by 25 percent between 2023 and 2024, while luxury apartment sales, particularly in branded residences, increased by 137 percent during the same period, Walpole said.
Inside the Gabrielle Chanel. Fashion Manifesto exhibition at the Victoria & Albert Museum.
Peter Kelleher
The Walpole report added that 78 percent of luxury retailers in London now consider wealthy residents to be a “top three success factor” for their stores.
Those same luxury brands and retailers are leveraging London’s strength in the arts to fuel sales – and to burnish their own intellectual credentials.
Walpole noted the “growing relationship between luxury brands and the arts,” and said 95 percent of luxury brands now consider their association with art and culture to be important to their brand identity.
The connection has led to the creation of new departments and the hiring of specialist talent to strengthen ties between the two sectors.
Luxury brands are increasingly responding to a growing customer demand for “authentic, cultural experiences, particularly among younger consumers.”
Artist Rana Begum’s geometric installation, currently in the window at Selfridges, with Elsa Peretti’s organic Bone cuffs in the foreground.
Hugh Seaborn, CEO of Cadogan, said there is now an “indisputable relationship between art, culture and luxury” in London, with consumers “accelerating their spending towards exceptional experiences” that go beyond purchasing.
As part of that trend, Tiffany has opened its Windows of Wonder at Selfridges which showcase newly-commissioned works from Damien Hirst and other contemporary artists. There are also windows inspired by artwork in the Tiffany & Co. archives.
“It was important for us to work with local artists who exemplify the incredible creative talent in the U.K., and who share Tiffany’s innovative spirit and commitment to craft,” said Tiffany & Co. CEO Anthony Ledru.
