Article

Why London is the European capital of luxury

London's luxury market has evolved from a few boutiques on Bond Street to an entire neighborhood, making the UK capital a magnet for high-end brands.

November 04, 2015

When the world's wealthiest people want to browse or shop in Europe, they head to a very specific area in London – one which has become synonymous with luxury of all kinds.

London's luxury market has evolved from a few boutiques on Bond Street to an entire neighborhood, making the UK capital a magnet for high-end brands.

Back in the 1990s, Bond Street was filled with shops selling antiques, jewelry and fine art, attracting mainly the European super-rich. Now, however, luxury retailers dominate an entire neighborhood. London's luxury quarter is largely responsible for growing the city's luxury goods market to €10 billion.

London has become the world's third largest city market for luxury goods according to Bain & Company. And JLL research shows that the city is home to more luxury retailers than anywhere else in Europe.

Bond Street's art dealers and jewelers remain, but today they are surrounded by businesses catering for every aspect of high-end life.

Recent expansion

Duncan Gilliard, a Director in JLL's Central London Retail team, says London's luxury market has been growing steadily in the last decade but rapidly accelerated in the last five years.

“London has become a significantly more desirable location globally than it was before. Then the Olympics provided a high or feel-good factor and brought us to the attention of the world. But you've got to remember, success breeds success. Retailers follow their competitors.”

“And when the sheer weight of demand for retail space outstripped Bond Street's supply, luxury brands began moving into neighboring streets. These streets gradually became more expansive and the brands began moving into the next nearest streets – we are continuing to see the impact of this ripple effect.”

Retailers are now also increasingly buying buildings so they have a stronger foothold in the quarter and more influence over its development.

A luxury 'eco-system'

Stretched over 65 streets and arcades across London's Mayfair and St James's districts, the quarter attracts shoppers from all over the world who spend £4.9 billion a year.

It showcases 70 percent of the world's top luxury brands, according to brand analysts TRAQ. These include fashion houses, watchmakers, leather goods ateliers and car dealerships.

In addition, the quarter has 42 fine dining restaurants – 23 of which share 31 Michelin stars between them – and 17 five star hotels, plus over 40 leading hotel brands.

“The London luxury quarter has its own eco-system and that's its advantage over other cities' luxury offer,” says Mark Smith, Head of Central London Retail Agency at JLL.

London's geographical position plays a big part in its success. High-end brands from Europe and the U.S. ‘meet in the middle', accessing each other's rich consumers, as well as those from the Middle East who account for a third of total international sales in London. 

The depth of the luxury quarter's offer also makes it special. Its elegant streets are within walking distance of some of the world's top cultural experiences, a proximity that distinguishes London from the world's number-one and two luxury hotspots – New York and Paris – where attractions are more spread out.

“Many of the quarter's streets remain in the hands of a single freeholder so plans for whole streets can be made holistically,” adds Smith. For instance Mount Street is mostly owned by Grosvenor Estate who have turned it into a major fashion destination.

Easing visa restrictions

The UK government's recent simplification of visa applications is expected to boost luxury sales as it will be easier for the Chinese to come to the UK. They are already the world's largest and fastest growing luxury spenders, splashing out around three times as much abroad as at home.

Meanwhile the average growth forecast for all London's international visitors is four percent, according to London's official promotion company London & Partners.

There's a positive outlook for the luxury quarter's domestic market too. The city's top earners continue to choose to work here, enjoy its great restaurants, and shopping on their way home. 

It's also very popular with UK tourists and day-trippers, and with the arrival of Crossrail (London's new high-frequency, high-capacity, cross-capital railway) the number of passengers using Bond Street station is predicted to grow by 80 percent to over 225,000 a day. An extra 1.1 million people will also be within 30 minutes of Bond Street on public transport.

“There's no indication that London or the quarter will fall out of favor any time soon,” says Smith. “I think the demand for luxury and London is set to stay.”