Vicinity Centres to build luxury apartments in Sydney amid major strategy shift

Chatswood Chase is being overhauled into a luxury retail and residential destination.

Mall owner Vicinity Centres is riding the recovery in spending and has flagged it will undertake a major new mall development in Brisbane, and will push into Sydney’s booming luxury apartment market.

The property group flagged a major shift into residential developments with projects planned in Chatswood and Bankstown in Sydney.

Vicinity is in the latter stages of designing at Chatswood Chase where it has 480 luxury apartments next to the mall planned.

At its Bankstown Central mall it is planning more than 1500 apartments but is not as advanced.

The Peter Huddle-led group is moving at a time when its malls are performing well even in the face of interest rate rises and could lock in the benefits of this part of the cycle with major projects.

Vicinity Centres chief executive Peter Huddle. Picture: John Feder

He said that malls needed to be repositioned in order to reap longer-term benefits and it could bring partners into residential projects it undertakes.

Vicinity lifted its first-half profit to $805.6m, up on $492.6m in the first half of 2025, as the company’s net income from its malls lifted, amid strong retail conditions.

Funds From Operations, a measure of property earnings, bumped up 1.3 per cent to 7.66c per security, but once adjusted for one-off costs was up 4.1 per cent.

At Uptown, Vicinity will overhaul the site and bring in upscale retail, dining and entertainment with a revamp worth up to $350m.

Vicinity also sold off a series of smaller centres, raising $327m in total.

Mr Huddle said that even with the focus on premium sales in flagship malls, the core portfolio was also performing well and he remains “cautiously optimistic” about interest rates.

Specialty and mini majors’ sales were up 5.1 per cent in the first half, driven by tenant remixing and increased shopper confidence and capacity to spend. Leasing spreads were at 4.6 per cent and average annual escalators on deals completed were at 4.7 per cent.

The company co-owns Melbourne’s landmark Chadstone shopping centre with billionaire John Gandel and it is benefiting from expanding the complex, with the new One Middle Road office tower now full.

The first stage of the redeveloped Chatswood Chase in Sydney opened last October and the new luxury precinct is on track to open this year.

Vicinity expects FFO and Adjusted FFO per security to be around the top end of the guidance ranges of 15c to 15.2c and 12.8 to 13c, respectively.

Vicinity shares were flat at $2.57 in early afternoon trade.