Business

The reasons behind LVMH’s expansion of its real estate on the Champs-Élysées

By Eva Morletto13 décembre 2023

After two previous acquisitions on the Champs-Élysées in Paris, Bernard Arnault is purchasing a building for nearly one billion euros.

The acquisition by Bernard Arnault of an 18,000 m² building on the Champs-Élysées strengthens LVMH's real estate presence in the prestigious heart of Paris (LVMH)

Real estate appears to be a current priority for Bernard Arnault. The recent acquisition of an 18,000-square-meter building on the Champs-Élysées in Paris enhances the prestige of LVMH's properties on the 'most beautiful avenue in the world.' This investment complements two other real estate acquisitions on the same avenue. In addition to the Louis Vuitton flagship store at 101 Avenue des Champs-Élysées (approximately 9,400 square meters) and the building located at 103 Avenue des Champs-Élysées (approximately 25,000 square meters), the head of the group has now added the one at 150 Avenue des Champs-Élysées. The Louis Vuitton flagship store is said to have been purchased for 770 million euros, and the one at 103 Avenue des Champs-Élysées will soon host the first grand hotel under the brand's name. Built in 1898, it has previously operated as a hotel, the Elysée Palace.

Bernard Arnault has invested around one billion euros in this new building, with a square meter valued at nearly 55,000 euros. The building was 72.6% owned by a Canadian investment fund, Mimco Asset Management. Investors reportedly bought the property just over a year ago for 750 million euros. According to CFNews Immo, the financial transaction - conducted and concluded in about three months - took place as an off-market share transfer. While rumors circulate, the exact plans of the Arnault family for this building remain unconfirmed. There is talk of a new flagship store for another LVMH flagship, Dior, or possibly for the American high jewelry house, Tiffany.

This ambitious initiative by Bernard Arnault raises questions, particularly about the risks in a struggling French real estate sector. Could the motivations be linked to competitive considerations, especially those of the Kering group, which had similar ambitions for this location for a potential new Gucci boutique?

At LVMH, nothing is left to chance. While the luxury real estate market in Paris is currently experiencing falling prices and an increase in properties for sale - an unprecedented situation in fifteen years - the ultra-luxury segment (1% of the market) continues to grow. As profit growth becomes uncertain in the face of declining demand for luxury products in several international markets - especially the American market - investing in real estate in key cities could be a wise long-term financial strategy, perfectly aligned with the preservation of wealth.

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