Global luxury brands such as Gucci, Cartier, and Louis Vuitton, among others, have signed leases for retail spaces in a new Mumbai mall developed by Asia’s richest Mukesh Ambani, as the brands and Reliance Industries look to tap lucrative prospects presented by India’s robust economic growth and the swift increase in the number of millionaires.
Jio World Plaza is likely to open this year, Reuters said citing an unnamed source. The new mall is situated within Reliance Industries‘ extensive $1 billion business and cultural complex in Mumbai’s bustling business district.
India is turning into a magnate for luxury brands. More than a dozen luxury consumer goods brands are entering the country ahead of the festive season, as they look to attract consumers in a market riding on the growing affluence of Indians with higher incomes, spurring greater discretionary spending even in small towns. The trend is being driven by increased exposure to global trends, younger people buying luxury products, and a post-pandemic boom, all of which are stoking interest from western luxury brands, executives said.
While a K-shaped economic recovery in India is also seen to be a strong trend, according to several economists, the Asian economy has beaten almost all countries in terms of rising wealth. Remember India is home for some of the world’s richest including Mukesh Ambani and Gautam Adani.
For the first time since the global financial crisis of 2008, global household wealth in 2022, measured in US dollars, registered a collective decline both in nominal and real terms, encompassing aggregate and per-adult figures. Significantly, wealth per adult also saw its second-largest reduction since the turn of the century.
However, India was one of few that saw a wealth increase. Along with Russia, Mexico and Brazil, India also saw the largest wealth expansion.
While Reliance has yet to announce information about the tenants, lease agreements obtained from real estate analytics firm CRE Matrix reveal that Burberry Group, along with various brands under the umbrellas of LVMH, Kering, and Richemont, have committed to renting retail spaces within the mall. Additionally, these brands have agreed to share a percentage of their monthly net revenue with Reliance, ranging from 4% to 12%.
The brands include jewellers Cartier and Bulgari, fashion houses Louis Vuitton, Dior and Gucci, watch brand IWC Schaffhausen and luxury luggage maker Rimowa, which will open its first outlet in India, Reuters reported.
Reliance, Burberry, LVMH, Kering and Richemont did not respond to a request for comment.
“Luxury brands have always struggled for quality retail spaces in India and many were forced to open their first outlets in luxury hotels,” said Anuj Kejriwal, CEO of India’s Anarock Retail. “These brands are now looking for meaningful presence.”
At almost 700 square metres (7,500 square feet), Louis Vuitton’s Jio World Plaza store will be the most spacious of its four outlets in India. Cartier’s store will be its second in the country and for Dior, it will be the third.
To ensure the mall retains its luxury appeal, some lease agreements like that of Dior include a clause that entitles it to a 25% rent reduction if at least four of 10 luxury brands including Gucci, Cartier, Bulgari and Tiffany don’t open their own outlets in the mall within six months.
India’s 1.4 billion population, the world’s biggest, has a per capita income of just $2,300, but the country is also home to more than 800,000 dollar millionaires who are splashing out on everything from luxury homes to expensive SUVs.
Real estate consultants Knight Frank estimate India will have 1.4 million millionaires by 2026, 77% more than in 2021, as the economy continues to strengthen.
The growth in India, where Euromonitor estimates the personal luxury market to expand almost 12% a year in 2022-2026 to nearly $5 billion, contrasts with the slowing economy in China, whose appetite for designer goods has driven sales growth in luxury firms for years.
China’s personal luxury market will grow an average 11.5% in the four years to 2026 to $107 billion, Euromonitor data shows.
(with inputs from Reuters)