Surging Chinese tourism and a resilient local economy is making Prague a promising new hotbed of luxury consumption.
The district around Parizska Street in the center of Prague’s old town has been a beehive of activity in recent years as luxury tenants including Louis Vuitton, Bulgari and Celine switched addresses, renovated interiors and expanded their retail footprints.
“Czech Republic is a market Louis Vuitton trusts a lot. Prague has become a vibrant metropolis and our aim is to provide exquisite services to our clients and set new trends in ready-to-wear,” said Michal Burke, chairman and chief executive officer of Louis Vuitton, which christened its three-story flagship on Parizska Street about five years ago. The location, which showcases the brand’s full product spectrum, spans 800 square meters and is four times bigger than its original space, which was Vuitton’s first step into Eastern Europe when it opened in 1998.
Retail rents in the area have risen to about 2,400 euros per square meter per year, according to Ilona Mančíková, ceo of Sotheby’s Real Estate. That compares to almost 26,000 euros for Causeway Bay in Hong Kong, almost 14,000 euros for Avenue des Champs-Élysées in Paris and 8,200 euros for Bahnhofstrasse in Zurich, according to Cushman & Wakefield research.
Luxury brands are also seeking locations in the vicinity of Parizska. Residents on nearby Siroka Street include Christian Louboutin, Hublot and The Store, a multibrand boutique carrying such brands as Victoria Beckham, Isabel Marant and Vivienne Westwood.
Luxury goods consumption in Czech Republic relies heavily on tourism. Data from tax-free operator Global Blue indicate that 42 percent of tourist spending comes from China, with the average spending per transaction being 1,841 euros. In 2019, the average spend by Chinese visitors to Prague increased 15.3 thanks to more direct flights from Beijing and Shanghai.
Jolana Hrebejkova, key account manager at Prague Airport, told WWD that the number of incoming tourists from China increased by 7.5 percent over the past year. Overall, Prague welcomed 1.9 million visitors from Asian countries this year, with Chinese clients representing 775,000 visitors, many of them eager to invest in high fashion, watches and jewelry.
Tomas Batek, sales manager of Global Blue, noted that apparel retail represents 78 percent of tourist spending on luxury, while the remaining 22 percent is lavished on jewelery and watches, where the main player on the market is Carollinum. The Czech company, established by Tamara Kotvalova, introduced Rolex and Patek Philippe to the local marekt. Carollinum, which also stocks brands such as Jaeger-LeCoultre, IWC and Vacheron Constantin, is primarily focused on boosting local consumption, which represent 70 percent of all Carollinum sales.
The retailer is forecasting double-digit growth this year.
Mercedes-Benz Prague Fashion Week, which showcases local fashion designers, and the August 2018 launch of Vogue Czechoslovakia have helped fan interest in high-end fashion in Czech Republic. And according to Euromonitor International, the Czech economy has exhibited resilience, underpinned by its solid manufacturing output. The automotive sector, which benefits from a skilled workforce, continues to attract foreign investment. Government finances are also strong and have led to lower public debt levels.