Asia will rebound to account for more than half of the luxury goods market within a decade, driven by rapid growth in household incomes, according to the Economist Intelligence Unit.
The continent, which currently accounts for around two-thirds of the market, has seen a slowdown in its luxury goods sales in recent years, which has “alarmed” the high-end brand houses.
But a new report from the EIU, Rich Pickings, said there are “strong prospects for a long-term recovery” in Asia and predicts it will account for 50pc-60pc of luxury revenue within 10 years.
“Fears of a slowdown have been heightened recently by China’s crackdown on displays of wealth and Japan’s shifting exchange rate,” said Jon Copestake, chief retail and consumer goods analyst at the EIU.
“But even in this climate, some luxury firms have continued to deliver strong sales. With Europe stagnating and North America subdued, the focus is firmly on Asia’s potential.”
While China is expected to be the main driver, with nearly 13m households on an average income of $150,000 (£96,720) or more by 2030, India will also be key, with more than 30m households on annual incomes exceeding $50,000.
A wealthy elite has also emerged in Indonesia on the back of the global commodities boom.
Meanwhile, Malaysia and Thailand are becoming shopping destinations, the EIU said, with the former benefiting from low import duties on luxury goods.
However, not all countries will see growth. In particular, Japan is suffering from a weak currency and fragile consumer confidence, which the report said will hamper its potential.
Savvy shoppers will also dent growth, as Asian consumers start to buy more luxury goods abroad.
“[But if firms] position themselves carefully, they can benefit from the fast growth of smaller cities in the Chinese interior, the rising number of wealthy entrepreneurs in India, or Indonesia’s increasing commodity-driven wealth,” the EIU report said.