The luxury market is having a strong comeback, in large part due to the return of China to pre-pandemic levels of expenditure.
Topline
According to a recent report by Euro Monitor, a provider of strategic and tactical global market intelligence, the recovery is defying a slowing global economy as consumer behavior continues to lean toward lifestyle purchases after the restrictions of the pandemic.
In addition to China, Europe is seeing notable growth thanks to favorable exchange rates and tax-free shopping. North America has also returned to pre-pandemic levels.
As international travel and tourism continue to recover, so too have luxury experiential and hospitality spending. This comes as welcome news to the luxury real estate market, particularly those specializing in second-home sales, which depend greatly on the strength of the tourism industry and business travel.
The pandemic has redefined the definition of luxury goods worldwide.
Key Facts
- Global travel is witnessing a robust recovery, reaching 85% of its pre-pandemic strength.
- Europe and the eurozone emerge as new luxury hotspots due to attractive exchange rates and tax incentives.
- China, once the cornerstone of luxury travel and spending, makes a significant comeback to the international scene.
- Overall sales are set to grow by 4% in 2023, reaching a projected $1.2 trillion.
- The pandemic has redefined luxury goods, emphasizing lifestyle choices that align with current global dynamics.
- Growth in the coming years will predominantly be fuelled by an enduring desire for luxury experiences, lifestyle, and hospitality.
An enduring desire for luxury experiences, lifestyle, and hospitality is expected to spur growth in the luxury space over the next few years.
Big Number
100% – The staggering growth in global arrivals by the end of 2022, highlighting the resurgent appeal of luxury travel.
Crucial Quote
“Maybe one of the biggest stories in luxury travel is that after three long years, China’s outbound tourism is finally back as the government ended its “zero-COVID” policy. Pre-pandemic, China was the most important source market for travel and luxury spending for many Asian countries and key global luxury shopping destinations, particularly in the US and Western Europe.”
The revival of China’s outbound tourism after three years is a significant boost for global luxury travel and spending. Historically, China has been a major contributor to luxury tourism revenues worldwide, and its return not only promises an economic rejuvenation for luxury hubs but also signals growing confidence in international travel, potentially inspiring other nations to open up further.
A desire to live in the moment has helped to spur interest in the luxury travel, goods and real estate space.
In-Depth Look
The pandemic has left an indelible mark on our perception of luxury and lifestyle. As home became a multifunctional haven, luxury goods transitioned to accommodate these changes, blending seamlessly with evolving lifestyle choices. This shift is evident from the rising demand for multifunctional luxury goods that not only speak to our changed way of living but also to our deeper desires to “live in the moment.”
In this rejuvenating phase, luxury travel, spending, and lifestyle are set to evolve with new trends and renewed vigor from historical giants like China. The future of luxury lies at the crossroads of traditional opulence and modern adaptability.
There is perhaps no industry where this shift is more apparent than luxury real estate, where buyers seeking lifestyle purchases helped drive sales and pricing in many markets to unprecedented levels.
