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  • Australia continues to attract first time foreign brands

Australia continues to attract first time foreign brands

1 November 2015
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​Sydney, 01 November 2015 - The pace of first time international brand entrants and expansions in Australia has continued at the same rapid rate as last year, with openings or leases secured on more than 30 new stores.

This compares to over 35 new openings and lease deals for the full 2014 calendar year, according to CBRE’s Q3 2015 Retail MarketView.

Danny Lee, CBRE’s Senior Research Manager, said Sydney and Melbourne had seen the highest levels of activity in 2015, followed by Brisbane and Perth.

“Foreign brand penetration in Australia is fairly low in comparison to other countries at 28%, which is a key attraction for these offshore retailers,” Mr Lee said.

“It would take an additional 50 brands to enter the market to reach the same level as some Asian countries, such as Singapore and Hong Kong, with 90 more required to reach the UK’s level of 57%.”

CBRE’s Head of Retail Tenant Representation Australia, Mr Starling said the low penetration rate in Australia served to minimise competition between foreign brands.

“Zara’s Sydney and Melbourne CBD stores ranked highly among the company’s best worldwide traders for the group in their first year of operation and continue to be in the top 10 list. H&M has also seen recent success with their new Australian stores, achieving the second highest sales per store across the group in 2014,” Mr Starling said.

Other key attraction for foreign retailers include the fact that Australia is one of the highest consuming developed nations, with consumption per capita growing at twice the rate of the US between 2008 and 2014.

“We believe the Australian retail market will undergo significant change over the next decade as it emerges from an era of strong competition from foreign brands and changing consumer behaviour aided by technology advancements,” Mr Starling added.

CBRE’s Head of Retail Brokerage Leasing Australia, Leif Olson said the outlook for CBRE retail remained positive, with super prime rents forecast to grow by 4% per annum over the next three years.

New supply is another key feature of the CBD retail landscape, with 57,000sqm of space under construction nationally and a further 111,000sqm of space in the pipeline.

“The entrance of foreign retailers has helped support CBD rents, although one of the main drivers of this continues to be the luxury sector. CBRE’s Retail MarketView identifies super prime and prime rent growth of 0.7% and 1.0% respectively in Q3, 2015, bringing annual rental growth to 13% and 6% respectively,” Mr Olson said.

“Given the demand from foreign retailers and improving performance of domestic retailers, the majority of retail developments are likely to proceed.”

“We also expect to see growth in the retail supply pipeline over the medium term. This is expected to come in the form of both retail space in new mixed use developments and a change of use trend in existing assets whereby space is converted to accommodate retail occupiers.”

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About CBRE Group, Inc.

CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (in terms of 2014 revenue). The Company has more than 70,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 400 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website at www.cbre.com.​

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