London is the best city in Europe for expanding international retail brands to invest.
Despite soaring costs and the uncertainty of Brexit, London tops a list that include Paris in second, Amsterdam in third, Barcelona in fourth and Warsaw in fifth.
The league table is compiled every year by real estate consultant Savills in its European Retail Destination Index.
Paris and Geneva are currently the top European markets for branded luxury watch boutiques with 33 and 24 respectively.
However, London’s growing tourist numbers and affluent demographic is making it increasingly attractive to luxury watch brands, according to research published by Savills in August, with 11 watch brands opening their first monobrand store in the city since 2010 and another six expected to open before the end of 2016.
Savills’ latest report examined the total number of standalone stores the top 10 global fashion brands/groups (based on global turnover) have in each city relative to population to generate an ‘opportunity’ score, then compared this to total annual retail sales and total retailer occupational costs.
Based on this approach, while Amsterdam, Barcelona and Warsaw may have lower total retail sales than Milan and Munich, their relatively low occupancy costs (€3,395, €3,477 and €1,725 per sq m per annum respectively) and high opportunity scores, imply greater profitability at a very high level.
This ultimately means they have good potential for retailer expansion, although this will still be heavily dependent on the retailer and specific location.
“For certain brands, particularly within the luxury space, markets with a relatively affluent population and large number of high spending international tourists are likely to have the strongest appeal. This explains why London and Paris have seen an influx of new luxury brands over the last three years,” said Marie Hickey, director in Savills research.
“But smaller European ‘gateway’ cities will also prove attractive, particularly those where high spending international tourist arrivals are increasing. The real appeal of these smaller ‘gateway’ cities is likely to be within the midmarket and ‘aspirational’ retailer tier. As these types of brands account for the majority of the retail market, the appeal of the gateway European cities looks set to continue,” she added.