From Seoul to Shanghai, LVMH goes local

LVMH, the luxury conglomerate home to brands including Louis Vuitton and Dior, reported revenue growth of 1% during the final half of 2025, beating analysts' expectations and signalling tentative signs of recovering demand among luxury consumers. 

It's been a difficult few years for luxury brands. Tariffs and softening demand in China have weighed on profits, but it was inflation that forced luxury brands to confront the limitations of offering homogenous products season after season. Price increases of more than 50% since the pandemic for largely unchanged products were dubbed "greedflation" by analysts and alienated aspirational consumers, sparking a renewed effort among brands to justify their value and relevance. 

LVMH is a useful bellwether for the luxury sector, but it's also a leader in using real estate to innovate. Hyper-customisation of stores has become a vital part of its strategy in winning back consumers – pivoting from homogenous stores to experiential concepts that position their products in local contexts.

An immersive narrative

In December, the company opened a new, six floor space in Seoul, South Korea, that it says "unfolds as an immersive narrative... that traces Louis Vuitton’s evolution from a visionary trunkmaker to a global House of Culture." The space includes two restaurants; Le Café by Maxime Frédéric, named 2025's world's best pastry chef by travel guide La Liste, and JP at Louis Vuitton, by two-Michelin-star chef Junghyun Park.

The opening follows that of 'The Louis' in downtown Shanghai in June –  a massive, ship-like structure that stands nearly 100ft tall. Again, the idea is to tie the brand's history as a trunk maker to Shanghai’s port history as the ‘Gateway to the East’, and visitors can dine at Café Louis Vuitton, which blends eastern and western cuisines. 

We'll be taking a deep dive into these themes in Knight Frank's upcoming Wealth Report. The theme extends well beyond retail and luxury goods. While some luxury consumers will always prefer the predictability of identical-looking high-end hotels across the globe, for example, a growing cohort of young, newly wealthy individuals are seeking distinctive experiences – a shift that is pushing luxury brands out of their comfort zones. 

Post-Budget clarity

UK private sector activity surged in the first weeks of 2026, with the overall rate of expansion reaching its fastest for just under two years, according to a flash PMI released on Friday. This was led by a robust and accelerated upturn in service sector activity. Business optimism is running at its highest level for 16 months. 

"A number of survey respondents suggested that post-Budget clarity had led to the release of new projects and helped to boost investment spending among clients, despite subdued projections for the broader UK economic outlook," the release said.

The data follows similar surveys showing consumer confidence running at its highest level since 2024. Inflation expectations have also started to creep up.

This makes it all the more likely that the Bank of England will hold rates steady next week and may skip cutting during Q1 entirely. Of the 56 economists surveyed by Reuters in a January 21-26 poll, all but two expected the BoE to hold rates at its February 5 meeting. Some 31 of 56 expect a cut by the end of March, while 45% forecast the BoE would hold rates through Q1.

A degree of stickiness

For a new edition of Intelligence Talks last week, I took a deep dive into Los Angeles’ luxury housing market– one of the world’s largest super prime residential hubs, currently ranking third globally for $10 million plus sales. Despite a range of challenges in recent years, the market continues to show remarkable resilience and remains a key destination for global private wealth.

I was joined by Nick Segal of Beverly Hills-based Carolwood to unpack the dynamics of a market that has recorded 250 sales above $10 million in the past 12 months, totalling $4.6 billion. Nick explains how the city is navigating significant headwinds—from the ULA tax reform, which imposes an excise tax of up to 5.5% on high value transactions, to complex insurance challenges and the emotional toll following last year’s devastating fires. While these factors have prompted some wealth migration to states such as Texas and Florida, the conversation explores why a degree of “stickiness” remains, and why some buyers are already returning to California.

The discussion explores the structural shifts in buyer behaviour, noting a move away from “aspirational” pricing towards a necessary realism among sellers. Nick highlights how tech wealth and other alternative sectors are backfilling changes in the traditional entertainment industry. In addition, a new trend in wellness driven development is reshaping the luxury landscape, with an increasing emphasis on lifestyle quality.

Looking ahead to 2026, we discuss the potential for a “righting of the ship,” driven by anticipated interest rate reductions and growing political momentum to recalibrate tax initiatives. They identify key sub markets to watch, including the Palisades—which is poised for a major recalibration—and Beverly Hills, which remains a stronghold for developers due to its exemption from the ULA tax.

Listen here, or wherever you get your podcasts. 

In other news...

From our team: Tom Bill on threats to the UK's haven status, and Flora Harley on the government's Warm Homes Plan.

Elsewhere - UK government caps ground rents paid to freeholders (FT), M&G expects 230-million-pound hit from Leasehold Reform Bill (Reuters), and finally, Artificial intelligence costs more UK jobs than it creates (Times).