Hermes, Christian Louboutin and the likes are willing to pay a lot for premium space in Mumbai

“The increased demand for luxury brands, the limited supply of properties available and severe market competition have forced rentals higher,” said Karl Nagarwalla of Nagarwalla Estates, a group that’s helped companies like Hermes and Louboutin get their showrooms in the city. Monthly rent for retail spaces in the area can stretch beyond $6,044 (nearly Rs 5 lakh) to $7,250 for a 1,000-square-foot space, he said.

In recent years, Hermes International, Christian Louboutin and others have set up shop, willing to pay the neighborhood’s sky-high rents for a space in the historic real estate, which gives them access to the country's rich and rising. Meanwhile, many banks, mutual fund managers and traders have moved to new financial districts, including the Bandra Kurla Complex anchored by Bank of America and Citibank, as well as suburban areas to the north.

The interest of international brands in Indian consumers was in full display, earlier this year, when Dior chose Mumbai’s iconic Gateway of India as the backdrop for its first runway show in India. The collection boasted sequined dresses, bright pops of pink and traditional Indian needlework on jackets, skirts and bags in an appeal to local patrons, and their wallets.

The pandemic fuelled a desire for personal luxury, while limiting travel, among people in India. This has made India a destination for luxury brands looking for a new frontier. “The coming of age of the Indian high net worth individual market is really attracting luxury players,” said Anurag Mathur, a partner at Bain and Company in New Delhi.

Around 1.66 million people in India are expected to have a net worth of more than a million dollars by 2027. The bracket of those with $30 million to their name is forecast to grow by almost 60 percent in the five years from 2022, according to Knight Frank’s Wealth Report.

“If you look at Mumbai, the streets have remained the same, but the people have always changed,” said Abha Narain Lambah, principal architect at Abha Narain Lambah Associates, which has worked on restoring buildings in the area. The previous occupants of the colonial-era buildings in southern Mumbai — stockbrokers, for example — weren’t looking at the architecture or the design value of it, she said. “Gentrification, new entrepreneurship, change of use is a feature that we have to embrace as long as those buildings can be recycled and adaptively reused.”

Many of the city’s heritage buildings have served multiple purposes throughout their history, and the new Sabyasachi store is no exception. The property, a Grade IIA heritage status building in neoclassical design, was restored and acquired from HSBC Bank by Indian City Properties in early 2021.

It was designed by the architectural firm Chambers & Fritchley in 1913, and was originally built for the British Bank of the Middle East, one of 37 banks in the area that eventually became known as the bank district, according to Indian City Properties.

“This strategic acquisition was not only aimed at preserving the cultural heritage of the Fort area but also at retaining its distinctive architectural character,” said Avinash Gupta, chief business officer at Indian City Properties, referring to the area that until the mid-1800s was a fortress town surrounded by bastions and guns.

Sabyasachi , known for its elaborate wedding dresses and jewelry, has been able to expand with backing from Aditya Birla Fashion and Retail Ltd., which took a 51 percent stake in the brand with an all-cash deal in 2021. The investment helped Aditya Birla in its most recent quarter — the company reported a loss in the three months ended June, but said Sabysaschi’s revenue rose rose and sales have had “good traction” at the Mumbai store, according to filings to the Bombay Stock Exchange.

Aditya Birla isn’t alone in adding premium and luxury brands to its portfolio. Asia’s richest man, Mukesh Ambani, with a net worth of nearly $95 billion on September 4, according to Forbes data, is also in the race. His Reliance Brands Ltd. has invested in MM Styles Ltd., which owns the eponymous fashion house run by Bollywood stylist Manish Malhotra.

Reliance Retail, managed by Mukesh's daughter Isha Ambani, has also taken a 52 percent stake in the label of Ritu Kumar, another Indian designer. Reliance’s latest financial results highlight the growth in non-food business, with its retail unit, which includes fashion and lifestyle brands, delivering 15 percent growth in revenue year-on-year.

“The competitiveness is good — the market as a collective is growing. There’s enough and more opportunity for all the brands to have over the next decade or so,” Bain’s Mathur said. “The pandemic made people question what are they storing their money for.”