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News Release

London

£1.3 Billion set to be invested into the London Luxury Quarter over the next 5 to 10 years according to new report from JLL


The Luxury Quarter is set for a landmark £1.3bn investment over the next five to ten years due to  several milestone developments across St James’s, Grosvenor Square, Cork Street and Bond Street.
JLL’s  report  ‘Hospitality & Service within the London Luxury Quarter: Driving Business Investments Through a Thriving Luxury Destination’    was commissioned by New West End Company and Heart of London Business Alliance. It revealed that this major investment is being driven by increased demand for office space from international hedge funds, boutique private equity firms and investment banks choosing the quarter as the London location to position their European HQs.

Over the last three years the London Luxury Quarter has witnessed a ‘cluster effect’ of hedge funds, boutique investment banks and private equity firms moving into the area making it home to the highest concentration of hedge funds in London, according to JLL’s report . This ‘migration of the hedge funds’ has contributed to the £1 billion in office transactions that the quarter accumulated in 2013.
 Mark Henderson, Chairman of the London Luxury Quarter commented: “The quarter has redefined the interplay between luxury and business on a global scale and this has triggered this cluster effect of boutique investment banks and private equity firms to move into the area. These types of businesses ultimately want to be near their competition and also have the luxury amenities to entertain their clients on their doorstep. The quarter is the luxury destination for ultra high net worth businesses and visitors alike.”

Mark Smith, Head of Central London Retail Agency at JLL added: “In the first Quarter of this year, Bond Street saw rents hit a record high of over £1,200 per square foot. Even with these exceptional rental levels, the London Luxury Quarter is still enjoying rapid expansion and strengthening of the luxury offering and it’s likely that ongoing demand could see continued growth of up to 20% rental value terms.”
 
THE MILESTONE DEVELOPMENTS: GOING BEYOND RETAIL
Property owners and landlords are recognising the opportunity that hospitality presents as a serious and profitable investment. In 2011, for the first time in the last decade, Grosvenor announced plans to launch a five star hotel venture into their Mayfair portfolio with restaurateurs Corbin & King. Opening this summer, The Beaumont Hotel in Brown Hart Gardens and Grosvenor’s on-going investment in North Mayfair is a clear reflection of its wider vision for the area, beyond retail.
 
SUPER-SPENDERS IN THE QUARTER
In addition to stimulating demand from hedge funds to locate into the London Luxury Quarter, the unique hospitality infrastructure is also fuelling rising spend from high-net-worth international visitors with retail and leisure spend peaking at £3 billion per year. According to Global Blue, the top spending tourists to the quarter in 2013 were Chinese, Qatari and Saudi Arabian visitors who on average are spending upwards of £1,300 per visit.
 
Hotels were also responsible for major sales within the London Luxury Quarter last year. The combined leasehold and freehold interests in the 5 star InterContinental London Park Lane sold for more than £400 million while The Metropolitan Hotel on Old Park Lane was sold to a UK based investor for more than £40 million.
 
THE CHANGING FACE OF HOSPITALITY
As the London Luxury Quarter finds itself in high demand, the hospitality industry is adapting to the changing needs and desires from both businesses and visitors to ensure their ongoing appeal, particularly to the increasing number of younger occupiers within the area.
 
These include new and improved private members clubs including 5 Hereford Street, The Arts Club, BAFTA and the Royal Academy Keepers House adding to the 45 established clubs and 37 Michelin starred restaurants which pinpoint the quarter as a major contributor to London’s position as a top 10 city for Michelin stars. Many of the 18 luxury five star hotels have introduced special concierge services for business and international travellers.
 
Tim Vallance, Head of Retail at JLL comments:  “As London Luxury Quarter finds itself in high demand, the hospitality industry is adapting to the changing needs and desires from both visitors and businesses to ensure their ongoing appeal, particularly to the new profile of office and residential occupier. Collaborative innovation between leisure and retail operators is another hallmark of the area and creates a holistic leisure experience for the visitor and occupier. Claridge’s loan of Burberry trench coats to guests during their stay and collaboration with brands such as Dior and Lanvin to design Christmas trees at the hotel entrance is a perfect example.”
 
The report can be accessed  here