Luxury retailers are expanding their bricks and mortar footprint in Australia, with demand for luxury goods well ahead of pre-pandemic levels.
Ray White Commercial Head of Research Vanessa Rader said despite inflationary pressures and rising interest rates, the luxury market continues to grow.
“While we have seen some volatility in activity, the overall increased wealth creation due to strong gains in housing over the past few years has improved sentiment surrounding luxury spending,” Ms Rader said.
“During a time when CBD retail has been under pressure, we have seen a strong commitment by luxury retailers to grow their brick and mortar footprint.
“While tenants were hampered by lockdowns restricting non-essential shopping, and border closures cutting international tourism, some retailers took this time to improve their customer experience and in-store offerings.
“However, for some, plans were in place well before COVID-19 as activity in the luxury retail space slowly grew momentum increasing returns year-on-year.”
Ms Rader said there have been a number of new luxury brands set up in Sydney that will continue to boost the higher-end segment of the market.
“The redevelopment of 25 Martin Place (formerly MLC Centre) is one of the longer-term projects which, upon completion, will include a hub for luxury fashion,” she said.
“New brands to Australia, including Missoni and Brunello Cucinelli, will join Valentino and Dolce & Gabbana at this premier address.
“Despite the disruption along Castlereagh St due to the Sydney Metro development, existing retailers including Bvlgari and Chanel welcome new retailers such as Robert Dubuis while Dior, Fendi and Hermes all have seen recent upgrades to their premises.
“Cartier’s new Oceania flagship location extends the luxury trail further down Castlereagh St to Westfield with Gucci, Prada, Versace, Piaget boutique and many more.”
According to Ms Rader, luxury brands are also expanding their operations across the other capital city markets.
“Sydney is not the only market to benefit from upgrades to luxury strip retail with Ralph Lauren announcing their first Western Australian offering and a new Melbourne CBD store due to open later this year,” she said.
“Adding to the luxury brands also calling major Australian cities home include LV, Hugo Boss, Tiffany and Burberry, to name a few.”
Ms Rader said luxury brands will help reinvigorate the city CBDs, which were decimated by lockdowns.
“During a time where retail vacancies have been pressured upward for Australian CBDs, the growing demand by these larger space users has been instrumental in improving vibrancy to our cities,” she said.
“These retailers attract customers from across the country as well as international interest seven days a week, not reliant on the working population which has been slow to return post pandemic.
“High capital expenditure in their stores keeps the quality of assets high and dictates new benchmarks in achievable rents, improving the attractiveness of our cities both domestically and internationally for visitors.”
