Sunday, September 23, 2012

Slowdown? Emerging market luxury investor says Europe a bargain

MILAN: Investors from emerging countries are hunting for cheaper luxury brands in Europe as the economic turmoil pushes valuations down, Kuwaiti luxury retailer Sheikh Majed Al-Sabah told Reuters.


As concerns about the economy spread to the resilient luxury industry, analysts expect the price of luxury assets to go down.

"All Europe is on sale. Europe is a bargain," Al-Sabah, a board member of Kuwaiti premier property developer Tamdeen Group, said at the presentation of his TFK fragrance collection ahead of the Milan fashion week on Tuesday.

The July sale of private equity firm Permira's fashion house Valentino to the Qatari royal family was valued at around 700 million euros ($909 million), or 2.2 times historical sales, in line with the luxury sector's average.

In 2001, LVMH bought Prada's stake in Fendi for 1.2 billion euros, or 4 times historical sales.

"Those times are over," Al-Sabah said, adding investors were looking for real estate opportunities such as luxury resorts.

As consumers become more affluent they move from accumulating goods to buying experiences, international luxury market specialists Ledbury Research said in a report.

Experiential luxury makes up over half of luxury spending in most countries, including emerging nations, according to Boston Consulting Group.

Individuals with over $1 million in investable assets put 37 per cent of their wealth in property, 18 per cent in cash, and only 17 per cent in stocks this year, Ledbury said. However, lower valuations may prompt independent European brands to keep investors waiting.

Family-run groups Roberto Cavalli and Versace have said they would consider a sale only at the right time and conditions. Designers are also afraid of losing their independence.

"I would like a partner, but the right one," Italian designer Antonio Berardi, who shows his collections in London, told Reuters at the Milan fashion week on Friday.

Al-Sabah, a member of the Kuwaiti royal family and the first to bring American brands Donna Karan and Ralph Lauren to Kuwait in the early 90s, said he was not looking for acquisitions but preferred to develop local brands in the Middle East.

He said he was working on a luxury department store concept in Kuwait City called "The Exhibition Hall" to launch in 2014 were arts and fashion would share the same space.

The project involves former Gucci brand chief executive Giacomo Santucci and architect Rem Koolhas, who have already worked for Prada.

indiatimes.com

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