By
Bloomberg
Published
Sep 4, 2023
A few blocks from the Reserve Bank of India’s headquarters in Mumbai lies the true marker of the country’s rising wealth — a new store from Indian fashion designer Sabyasachi Mukherjee in a restored building dating from the early 1900s.
The opening of the four-story flagship makes Sabyasachi the latest luxury retailer to follow the money to southern Mumbai, which has been the home of India’s financial services industry since the precursor to the Bombay Stock Exchange began there under a banyan tree in 1875. In more recent years, Hermes International, Christian Louboutin and others have set up shop, willing to pay the neighborhood’s skyrocketing rents for space in historic real estate and access to a rising upper class.
“The coming of age of the Indian high net worth individual market is really attracting luxury players,” said Anurag Mathur, a partner at Bain & Company in New Delhi. The pandemic fueled a desire for personal luxury while limiting travel, making Indians buy these goods in their home country, he said. For luxury brands, “there’s clearly a desire to look for a new frontier and India very much, with its change, offers that.”
Around 1.66 million people in India are forecast to have more than a million dollars’ net worth by 2027. The bracket of those with $30 million to their name is forecast to grow by almost 60% in the five years from 2022, according to Knight Frank’s Wealth Report.
Signs that international brands are paying attention were on 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 consumers, and their wallets.
The neighborhood around the Gateway — including the boutique-filled The Taj Mahal Palace hotel — has always been home to affluent, old school business families. But while commercial real estate has gotten too pricey for some financial services firms, several international brands see the value.
“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 to $7,250 for a 1,000-square-foot space, he said.
As a result, 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.
“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% 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, also has set his sights on bringing luxury experiences to India. His Reliance Brands Ltd. has invested in MM Styles Ltd., which owns the eponymous fashion house run by Bollywood stylist Manish Malhotra. The conglomerate has also taken a 52% 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 that includes fashion and lifestyle brands delivering 15% 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.”
