Chinese consumers watching the value of their homes fall are losing the confidence to spend on designer goods
3 min
How closely is demand for $3,000 handbags tied to home prices in China? Quite closely, it turns out, which is unfortunate for luxury brands.
Europe’s luxury stocks fell in early trading Tuesday after China’s economic planning agency failed to announce additional measures to kickstart growth that some investors had hoped for. The sector is still up 10% on average since Beijing launched its initial stimulus plans late last month.
Beijing hopes a cut to mortgage rates, and lower down-payment requirements for buyers of second homes, will jump-start the country’s troubled housing market. A package of loans to brokers and insurers to buy Chinese shares has had initial success at lifting the stock market.
Luxury spending in China has traditionally been more correlated with its home prices than with the financial markets or overall economic growth. Around 60% of net household wealth was tied up in property before prices peaked in 2021. Barclays estimates that falling home prices have destroyed about $18 trillion in household wealth since then, which is equivalent to roughly $60,000 per family.
This, along with worries about the wider economy, is hurting consumer confidence. Retail sales rose just 2.1% in August compared with the same month last year, according to data from China’s National Bureau of Statistics. When global luxury brands start to report their third-quarter results next week, Chinese demand is expected to have slowed since they last updated investors.
Flagging sales come at an unhelpful time for Europe’s luxury companies, which rely on Chinese consumers for a third of global luxury spending. After several bumpy years during the pandemic, luxury brands and their investors hoped that a comeback in Chinese spending would compensate for a slowdown among Europeans and Americans.
This looks increasingly unlikely. Luxury sales to Chinese shoppers are expected to shrink 7% in 2024 and by 3% next year, according to UBS estimates. As luxury brands have high fixed costs, including the most expensive retail rents in the world, a slowdown with such key customers could have an outsize impact on profit margins.
The last time the luxury industry went through such a rocky patch in China, barring the pandemic, was between 2014 and 2016 when Beijing was cracking down on corruption, including officials who were gifting Louis Vuitton handbags and Rolex watches in exchange for political favours. The global luxury industry barely grew for two years during China’s anticorruption drive, which also coincided with a property-market correction in the country. It didn’t help that shoppers in other markets were also tiring of logos back then.
Europe’s luxury stocks look expensive today compared with that time. As a multiple of expected earnings, listed brands’ shares now trade at a roughly 40% premium to their 2014 to 2016 average.
To justify the higher price tag, Beijing’s housing and wider economic stimulus would need to indirectly lift luxury demand. Measures rolled out so far may not be enough to slow the slide in home prices. China’s housing market is oversupplied by around 60 million units, according to Bloomberg Economics estimates.
New incentives to kick-start consumption are expected soon but will probably target mass-market products like white goods. China already rolled out trade-in subsidies for home appliances earlier this year and a range of consumption coupons.
None of this is very helpful for sellers of expensive luxury goods. For brands to see a recovery, Chinese consumers that spend anywhere from $7,000 to $43,000 a year on luxury products would need to feel much better about their finances than they currently do. Spending by this group has fallen 17% so far this year compared with the same period of 2023, according to a report by Boston Consulting Group.
Half-finished, abandoned housing estates are a big headache for China’s government, and are also on the mind of executives in Paris and Milan. Though the fortunes of luxury bosses likely isn’t high on Chinese officials’ priority list, their fates may be intertwined.
The Australian leather house has opened an immersive four-day pop-up in Manhattan, unveiling its Bloom Collection and redefining what a product launch can look like.
Following the successful launch of its Palais Collection, MAISON de SABRÉ has unveiled a new modular handbag system offering more than 720 styling combinations.
Georgetown agent Jamie Peva blends history and real estate on Instagram, turning local stories into a powerful sales strategy.
5 min
On a recent morning in Georgetown—Washington, D.C.’s oldest neighborhood—real-estate agent Jamie Peva strode down leafy N Street, brimming with historical tidbits.
Jackie Kennedy once lived on the street, he said. So did Ben Bradlee, former executive editor of the Washington Post, along with a former Miss America and a powerful U.S. Senator. Bradlee’s widow, author Sally Quinn, and Eric Schmidt, former CEO of Google, own stately homes there.
“I’ve seen a picture of Lyndon Johnson coming out of this house,” said Peva, passing a Federal-style brick mansion. “Also, the Beatles went to a lawn party here.”
Peva, a 60-year-old agent with Washington Fine Properties, has sold Georgetown real estate for over three decades, often traversing the neighborhood by bicycle. Of the roughly 2,500 houses in the historic neighborhood, he has been involved in the sale of 460, he estimated. A self-styled historian of the neighborhood, he knows stories behind its houses and their owners going back generations.
With a knack for lively storytelling, he shares his knowledge with some 37,500 Instagram followers, who have made Peva—sporting the bow ties he has worn since boarding school—an unlikely social-media influencer. Many of his followers are locals, and most have no plans to buy or sell real estate—until they do. It is then, according to Peva, that his spirited reels bring him to mind.
“It’s the digital version of a refrigerator magnet,” he said.
After Peva’s first video in November 2023, his eponymous Instagram account sparked a 10% increase in sales volume in the first year, and another 20% the next, he estimated. “It’s been very good for business, there is no question about it,” he said.
But Peva’s posts have also made him a local celebrity. As he walked down N street, the driver of a Mercedes station wagon slowed down to honk and wave. A lady walking a large dark gray dog stopped to ask what he was filming that day (a reel about a Colonial-era bottling plant.) Peva knew the dog from walking his two springers, Jumpy and Peggy-O, in the neighborhood.
“I need to make a video about the pooches of Georgetown,” he mused.
A growing number of real-estate agents now use social media to sell, and some have millions of followers with reels featuring ultraluxury pads, selling tips or reality TV-style reports on their daily lives. While Peva posts about his listings—and sometimes those of other agents—he mostly focuses on Georgetown history, local businesses and community events, saying his goal is to benefit both his business and the neighborhood.
“If we don’t find something genuinely interesting and worth sharing, we won’t do it,” said Peva’s daughter, Violet Peva, a New York social-media strategist who films, edits and posts his reels. “We cover many topics, not just real-estate information.”
Peva is originally from Connecticut, but has lived in Georgetown for over 30 years, currently in a cottage-style house with a white picket fence. Over the years, Georgetown has changed. The Georgetown Set, a powerful group of Cold War-era residents whose Sunday-night potluck dinners are said to have swayed U.S. policy, has long faded away. The community is still home to high-profile Washingtonians, including a Republican senator and several cabinet members. But it increasingly also attracts technology and finance executives, according to Peva. He now routinely signs nondisclosure agreements, ensuring privacy for wealthy clients. The shift has made him rethink his marketing approach.
“For years, a big part of our Georgetown business was made up of people who maintained a low profile,” he said. Real-estate agents were similarly low-key. Today, curb appeal is more important, he said, and agents are promoting themselves more. “As this change was underfoot, I was thinking that I needed to evolve myself too,” he said.
Though his own social-media use is mostly limited to following sailing accounts, he asked his daughter to help him post his listings online. Violet, now 26, started coming to D.C. once a month to film his reels. After an early video, on a condominium building called the Elliott, her sister Fern called her to report: “Daddy’s blowing up on Instagram,” Violet recalled. The reel got over 50,000 views. The next two each drew over 300,000. Peva’s most popular post ever, with over 838,000 views, was about the Grateful Dead playing in Georgetown. Sometimes, Peva interviews Georgetowners such as Quinn, the author, or Jamie Stachowski, the owner of a local butcher shop.
Peva, who majored in history in college, now spends up to two hours a day on research, usually in the morning while on his stationery bike. Online, he pores over old newspapers or the Library of Congress website, and he has a collection of articles and books—in and out of print—about Georgetown.
Companies often approach Peva for promotional posts, he said, but he turns them down, feeling that followers would lose interest in constant commercials. One exception is a recent paid post on Mount Vernon, the former home of George Washington. Peva wanted to share its history, he said, and didn’t want to lose the opportunity to another Instagrammer.
Anthony Arend, a professor at Georgetown University, has lived in his current home for 19 years without any plans to sell or buy real estate. But he follows Peva and often likes his posts.
“He is very charismatic, he is energetic, and he obviously knows a lot about the community,” said Arend, who has referred house-hunting friends to Peva.
One of Peva’s biggest deals—the $10.5 million sale of a 19th-century Italianate mansion—came after he made two 2024 reels featuring the property. In March, he sold the longtime O Street home of Tim and Jane Matz for $5.8 million after featuring it on his Instagram. Peva had showed them the home 25 years earlier, with Violet in a baby carrier on his back.
Last year, Kate Watts, 49, a digital consultant, called Peva to sell her late father’s three-bedroom house on Q Street; her husband had seen Peva on Instagram. In an October reel, Peva praised the architecture of the house, designed by modernist Hugh Newell Jacobsen. Halfway through, he mentioned an open house the next day, ending with an upbeat: “Did I also mention this house is for sale? $3.75 million!” The reel got 27,000 views, the open house was packed, and the buyers made an offer at the list price on the same day.
