Europe leads as luxury retail growth focuses on core markets

Luxury retail strategies are becoming more focused, especially in top European markets, as prime retail opportunities become scarcer.

Luxury retail - Savills

According to the Savills Global Luxury Retail Outlook 2026, luxury brands are adjusting their expansion plans to concentrate on Europe's most sought-after locations.

Savills' new research indicates that approximately half of Europe's prime luxury streets are expected to see rental growth in the next year. This is driven by a persistent lack of available space and strong demand from retailers for these key locations.

Globally, across 27 major luxury destinations, average prime rents increased by only 0.9% in 2025. This is a significant drop from the 6.6% growth seen in 2024, showing that strong rental growth is now limited to a select few high-performing markets. In most other places, rents are stabilizing due to global economic challenges and shifts in travel behaviour influencing retailers' decisions.

Europe was a standout performer in 2025, with average rental growth of 1.2%, surpassing other regions. This growth wasn't confined to major luxury hubs like London, Paris, and Milan; smaller, desirable markets such as Amsterdam, Vienna, and Copenhagen also experienced positive rental increases.

The scarcity of space is particularly noticeable in London. In 2025, 42% of new luxury store openings were actually expansions—either within existing stores or moving to larger premises. This was the highest proportion among the world's top five luxury cities, though these real estate decisions were made 18 to 24 months prior.

Anthony Selwyn, co-head of Global Retail at Savills, commented: “What we are seeing is a clear recalibration rather than a slowdown in intent. With prime availability increasingly constrained, vacancy and quality of opportunity are now the key drivers of activity. Across Europe in particular, competition for core pitches is intensifying, which is creating early upward pressure in the most tightly supplied locations. As a result, brands are prioritising securing new space or upsizing in existing prime locations.”

Marie Hickey, Global Retail Research lead at Savills, added: “After the strong rebound in 2024, luxury rental growth slowed sharply in 2025, highlighting a more normalised and cautious market environment. Europe continued to outperform other regions, but growth has been highly concentrated, with sustained demand colliding with persistent supply constraints on a limited number of prime streets, a trend that we expect will continue well into 2026.”