Growth Potential High in Madrid’s Luxury And Retail Markets

Growth Potential High In Madrid's Luxury and Retail Markets

Growth Potential High In Madrid’s Luxury and Retail Markets

Madrid has become a top destination for overseas shoppers looking for a bit of luxury retail therapy. While austerity measures at home have forced Spaniards to tighten their belts, an influx of tourists, particularly Chinese, Japanese and Russian visitors, looking for designer fashion and home accessories are keeping the consumer flag flying.

In 2012, visitors to Madrid rang up a total of 1.1 billion euros at the tills in top-end fashion and accessory stores such as Loewe and luxury interior design shops like Gaston y Daniela.

Proof of foreign visitors’ purchasing power can be seen at the stores of Spain’s iconic retail brand El Corte Ingles. On the ground floor of the establishment located near Madrid’s emblematic Puerta del Sol, Japanese shoppers eyeing luxury accessories are attended in their own language by a team of sales people.

LUXURY INVESTMENT OPPORTUNITIES

Madrid  is the second favourite European destination for shoppers after London, and Calle Serrano is its version of Fifth Avenue, where luxury brands like Prada and Cartier compete for business. And these luxury firms are snapping up opportunities to invest in new store openings in this prestigious location where “for sale” signs on shop fronts are a rare sight.

In the area between Calle Serrano and neighbouring Calle Ortega y Gasset, rentals exceed 215 euros per square metre for 100-200 metres of commercial premises.

But the yield on that investment is guaranteed, which explains why Spain’s Inditex – the world’s largest clothing retailer – has decided to build a new store for its flagship Zara brand on Calle Serrano.

TOURISM, TAX INCENTIVES

The increase in wealthy Asian and Eastern European tourists, the extension of store opening hours and the introduction of Sunday openings have all contributed to the rise in sales of Spain’s luxury goods and services. A shopping spree to Madrid is also attractive for non-European Union visitors because they are exempt from paying the 21-percent value added tax on goods purchased in Spain.

And Spanish luxury brands have also been hard at work to enhance their profile abroad. In 2011, a group including Loewe, Carrera y Carrera and Lladro formed an organization called the Circulo Español del Lujo Fortuny to promote their products.

One of the newest trends within Spain’s tourism industry is shopping tours, including the Made In Spain Shopping Tour which offers tailor-made shopping trips for individuals visiting Madrid for a predetermined time. Shopping with private showings and personal assistants are a big draw for the ex-pat elite.

For information on the luxury retail market in Spain, contact corporate law firm Argali Abogados.

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