Intelligent Investment
Luxury Real Estate 2024
October 23, 2024 20 Minute Read
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Since the Global Financial Crisis, the luxury market has experienced significant growth, driven by an increase in the number of high-net-worth individuals (HNWIs), rising global wealth, pent-up demand leading to "revenge spending," and tourism. Forthcoming generational wealth transfers will also reshape consumer demographics, highlighting the need for industry adaptation.
CBRE’s new report examines how the luxury market's evolution is impacting real estate in retail, hotels, and living, with a focus on the key European markets of London, Paris, Milan, and Amsterdam.
CBRE’s new report examines how the luxury market's evolution is impacting real estate in retail, hotels, and living, with a focus on the key European markets of London, Paris, Milan, and Amsterdam.
Retail
Post-pandemic, luxury retail has surged due to pent-up demand and "revenge spending," with major luxury brands outperforming the mass-market. Despite a slowdown in 2024, long-term growth remains promising due to rising numbers of HNWIs and an impending wealth transfer to younger generations.
Key Findings
- Outperformance of the mass-market: Luxury retail brands have historically outperformed the mass-market, both in terms of sales and share price growth, as well as at a property level, in terms of rent and capital value growth
- The changing face of key streets: Key luxury shopping streets in Europe have seen a decline in the proportion of clothing and footwear retailers, while more homeware and health & beauty retailers have opened
- New luxury areas are emerging: Up-and-coming luxury retailers are seeking space beyond traditional luxury catchment areas
Hotels
The luxury hotel market is expanding, with traditional opulence remaining a hallmark of luxury. However, demographic shifts and a desire for unique travel experiences among discerning guests are driving increased demand, pointing to continued growth opportunities.
Key Findings
- Demographic shifts: The changing demographics of the wealthy class are having a material impact on the world of luxury hotels, just as they have affected the luxury retail and living sectors
- Experience becoming the key: Immersive and authentic experiences are becoming key differentiators in the luxury hotel segment. Guests increasingly seek personalised and meaningful travel, elevating the importance of experience-based offerings in all areas, from wellness to culture
- Brand partnerships: While some luxury hotel brands have explored partnerships to reach new audiences, they have ample scope for further growth through long-term associations
Living
Luxury living is evolving, with sustainable homes in less populated areas gaining popularity among HNWIs and affluent millennials, especially in European cities like London, Paris, and Amsterdam. There is also increasing demand for high-quality second homes.
Explore our comprehensive analysis of this market across three key sectors and stay ahead of the trends shaping the future of luxury.
Key Findings
- HNWIs in European cities: London still the most popular among HNWIs, followed by Paris. The number of millionaires is growing in Amsterdam, Lisbon, Dublin, and the cantons of Switzerland
- Currency influence: The favourable US Dollar/Euro exchange rate is attracting North American buyers to Europe
- Evolving expectations: HNWIs now seek second homes that match the quality and amenities of their primary residences
Explore our comprehensive analysis of this market across three key sectors and stay ahead of the trends shaping the future of luxury.
Contacts
Alex Ozga
Associate Director, European Industrial & Logistics and Retail Research
Charlotte Kenna
Director, External Communications & PR
