Despite the slowdown in the lucrative Chinese market, luxury brands have achieved exceptional results since the decline of the Covid pandemic, thanks to their efforts to diversify their customer base and appeal to younger generations and the middle class, particularly in Asia. The resurgence of global tourism, especially in France and Paris, also played a significant role, with over 44 million travellers visiting the country last year. Although tourist numbers in the Île-de-France region doubled compared to 2021, they did not yet fully recover to pre-Covid levels (-13% compared to 2019). Additionally, the strength of the US dollar encouraged Americans to engage in luxury shopping experiences across Europe. The removal of tax-free shopping for foreign visitors in the UK due to Brexit also incentivised high-end customers to spend lavishly in Europe, especially in Paris. These factors prompted major luxury conglomerates to invest in the real estate market through large-scale operations in central Paris. “In recent months, luxury brands have invested several billion euros in the acquisition of retail premises, illustrating their desire to not only control their entire production chain but also maintain a long-term and high-quality distribution network,” noted analysts at Cushman & Wakefield. “This strategy, which has already been implemented on a smaller scale in Anglo-Saxon markets (Hermès, Max Mara, Ferragamo), is now expanding in the French market as more mature luxury groups aim to secure their long-term physical presence by acquiring boutique properties and head offices,” they continued.

According to Cushman & Wakefield, luxury giants were able to benefit from their strong financial results and their brands’ strong reputations last year. One of the most remarkable transactions in Paris during 2022 was the acquisition of the property located at 22 Avenue Montaigne, where the ground floor has served as Louis Vuitton’s flagship boutique for several years. The 18,000 square metre building, already owned 40% by the Bernard Arnault Group, saw the group take full ownership. Meanwhile, Gucci (Kering) acquired over 2,000 square meters at the corner of Rue de Castiglione and Rue Saint-Honoré.”In an investment market in search of landmarks, these sales could segment assets and their pricing based on the interest they represent for these luxury players. These flagship buildings owned by major luxury groups could influence the surrounding rental market,” said Vincent Ascher, director of luxury activity at Cushman & Wakefield. In Paris, the geography of luxury commerce remained steadfast, with historic streets and Boulevard Saint-Germain claiming the top five spots in terms of transactions. Avenue Montaigne, which was losing momentum even before the Covid pandemic, made an impressive comeback. For the first time in five years, Avenue Montaigne surpassed Rue Saint-Honoré in terms of activity. In fact, these two streets remained the most coveted addresses for luxury brands in the French capital. In 2022, both avenues witnessed the arrival of notable brands such as Gucci Valigeria, Celine, Jimmy Choo, and Jacquemus, along with the expansion or renovation of Bottega Veneta, Dior, Saint Laurent, and Alexander McQueen stores. The Champs-Élysées experienced a transformation with the entry of high-end watch brands like Tudor, Panerai, and IWC, altering the avenue’s landscape. Meanwhile, the Left Bank “is regaining a place in the rankings with a revival of commitments on Boulevard Saint-Germain”, facilitated by the openings of Saint Laurent and Gucci, and the arrival of Rolex on Rue de Sèvres. Place Vendôme and Rue de la Paix dropped out of the top 5, although their prestigious boutiques are still undergoing several restructuring projects. The rebound is expected to continue in 2023, fueled further by the anticipation of the upcoming Olympic Games in 2024. Cushman & Wakefield predicts around 40 new luxury boutique openings, with Avenue Montaigne and Rue Saint-Honoré remaining at the epicenter of the activity. “This network of luxury brands is also expanding into provincial resort markets, benefiting beach destinations such as Cannes, Nice, and Saint-Tropez, as well as mountain destinations in the French Alps (Megève, Courchevel),” highlighted the report. “The luxury retail market in France is currently on a positive trajectory. Despite some signs of slowdown, this trend is expected to continue in the coming months,” concluded Ascher.