Investing in buildings can be a good opportunity, if you know where to buy.
Investing in buildings can be a good opportunity, if you know where to buy.
Image: Manelisi Dabata.

Investors who like the luxury-goods industry have another asset-gathering opportunity that occurred to me recently: buying properties in areas known to be good for luxury-goods retail stores.

If you know what you are doing and have lots of money offshore, you might look to acquire actual buildings in a luxury-goods district. Retail companies come and go, and landlords get tired of the churn. Keep in mind that physical buildings are very expensive to buy and sell, and require an exhausting amount of attention and ongoing maintenance.

In Europe, luxury-goods retail tends to be concentrated on certain streets. Properties are owned by families, very old foundations, or endowment trusts. You’d have to spend a few years working out who owned what.

Keep in mind that physical buildings are very expensive to buy and sell, and require an exhausting amount of attention and ongoing maintenance

If you were able to find anything to buy, good luck making any changes to an ancient palace on Milan’s Via Monte Napoleone, Barcelona’s Passeig de Gràcia, Berlin’s Kurfürstendamm, Florence’s Via de’ Tornabuoni or London’s Bond Street. Not to mention the most exclusive luxury addresses of all: Paris’ Champs-Élysées, Avenue Montaigne, and Rue du Faubourg Saint-Honoré.

In Asia, consider Tokyo’s Ginza and Aoyama districts, Shanghai’s Huaihai Middle Road or Seoul’s Cheongdam-dong neighbourhood. You might want to avoid Hong Kong’s Central, TST, and Admiralty for the moment, though.

It may be easier to start in the US, looking for something on San Francisco’s Union Square, Los Angeles’ Beverly Hills or New York’s Madison Avenue, Fifth Avenue, or in SoHo.

Here in South Africa it seems easier. Consider snapping up some shares of mall owners like Growthpoint (owns part of the V&A Waterfront), Liberty Two Degrees (owns part of Sandton City) or Hyprop (owns Canal Walk, Rosebank Mall, and Hyde Park Corner).

Theron is CEO of asset manager Vestact.

From the September edition of Wanted 2019.

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