There is a correlation between luxury goods and residential real estate sales in London due to purchasing by the same high-net-worth spenders from resource rich countries in the Middle East, Asia and Africa. Overseas visitors buying handbags, clothing and jewellery in Knightsbridge, Mayfair and Marylebone are also snapping up apartments and houses in the streets off the city’s retail thoroughfares. Where there have been drops in retail spending by certain overseas countries, there has also been a decline in property purchases. These are the findings of new analysis of the interplay between retail and property sales in London by boutique estate agent Rokstone.
Rokstone has analysed the latest retail sales figures in London generated by shoppers from particular overseas countries, provided by consumer consultancy Global Blue. Rokstone has compared these retail sales figures against residential property sales from investors from these same countries. The results show a significant correlation: overseas countries with big spenders in London’s luxury retail scene are also big spenders in London’s premium property sector. Similarly, countries where London retail sales have dropped dramatically over the last 12 months, have also witnessed drops in purchases of residential property in the capital.
In rank order, the top luxury retail and property shoppers in London are purchasers from Saudi Arabia, Qatar and China. Since the start of 2015, luxury retail spending in central London by shoppers from Saudi Arabia is up 28% y-o-y, with the average spend per transaction averaging €2,038 (£1,495). Similarly, residential property sales in prime central London to Saudi purchasers is up 18% y-o-y, with the average spend per transaction ranging from €6.9 mln to €27.2 mln (£5 mln to £20 mln).
Likewise, retail spending in London by shoppers from Qatar is up 12% y-o-y, with the average spend per transaction averaging €2,598 (£1,906). Residential property sales to Qatari buyers is also up 15% y-o-y, with the average spend per transaction ranging from €4 mln to €11 mln (£3 mln to £15 mln).
Retail spending in the capital by Chinese shoppers is up 9% y-o-y, with the average spend per transaction averaging €1,976 (£1,450). Likewise property sales in London to Chinese purchasers is up 3% y-o-y, with the average spend per transaction ranging from €615,000 to €2 mln (£450,000 to £1.5 mln).
Rokstone highlight that over 80% of all property purchases by buyers from Saudi Arabia and Qatar are in the districts of Knightsbridge, Mayfair and Marylebone, and these are the key locations where they do the bulk of their luxury retail shopping. Together, Saudi and Qatari shoppers account for 16% of all overseas retail sales in London’s West End. Chinese property investors look beyond London’s West End and also buy in the City of London, Canary Wharf, Deptford and Stratford. Similarly, whilst Chinese shoppers account for 20% of total overseas shopper spending in London’s West End, they also shop in Westfield Stratford, Canary Wharf and Westfield White City.
Likewise shoppers from countries which have shown strong drops in retail spending in London have also seen drops in spending on luxury residential property in the capital. Retail spending by Nigerians is down -12% y-o-y, with an average spend of €1,402 (£1,029), and likewise spending on property is down -18%, with an average spend of €6.8 mln to €68 mln (£5 mln to £50 mln). Belgravia and Knightsbridge are the top property locations for Nigerian purchasers.
Retail spending by Kuwaiti nationals is down -9% y-o-y, with an average spend of just €1,064 (£781) per shop, and likewise property spending is down -15%, with an average spend of €4 mln to €13.6 mln (£3 mln to £10 mln). Retail spending by UAE nationals is down -6%, with an average spend of €2,114 (£1,551), and likewise property buying is down -12%, with an average spend of €6.8 mln to €13.6 mln (£5 mln to £10 mln. Like the other Gulf States, Mayfair, Knightsbridge and Marylebone are the preferred buying locations for property investors from these countries.
Resource: Rokstone
