Australia next as luxury retailers top out in Asia
Australia’s luxury retail market is tipped to the the big beneficiary as Asia maxes out its upmarket offerings, a new report says.
A CBRE report into the future of luxury retail in the Asia Pacific found major markets including China and Hong Kong were now so flooded with big-name brands that those brands were now feeling the pinch and had stopped their plans for continued Asian expansion.
The report says luxury brands have achieved almost 90% market penetration in China and more than 80% in Hong Kong.
Australia, unlike much of Asia, is far from saturation point in terms of luxury retailing
With Australia sitting at just 50%, CBRE’s Australian head of retail tenant representation Tim Starling says the local market is well positioned to capitalise on the slowdown in expansion in other Asia Pacific countries.
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“Australia, unlike much of Asia, is far from saturation point in terms of luxury retailing,” Starling says.
“At present we are witnessing the largest influx of new luxury brands in the country’s history. This is coming from two distinct sectors, with fashion/ready to wear and jewellery retailers being the most inquisitive.”
The report says luxury retailers have traditionally preferred other markets over Australia, due to the dominance of department stores here.
But Starling says agents are fielding unprecedented levels of inquiry as overseas retailers chase space for standalone stores, with 16 luxury brands entering Australia in 2014 – more than double the number in 2012 and 2013 combined.
New development activity is giving landlords the ability to create successful ‘luxury quarters’
The push is being driven by groups including LVMH, Kering Group and Richemont, with other brands such as Valentino and Moncler also eyeing a potential move into the Australian market, he says.
“Another trend we are witnessing involves brands being more willing to seek space in shopping centre environments.”
“This was previously a ‘no no’ for many of the new brands looking to enter the market. However, new development activity is giving landlords the ability to create successful ‘luxury quarters’, with Chadstone in Melbourne being the best example of this in Australia.”