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Queensland 4002

CBD retail sector : the quiet achiever

Brisbane CBD gourmets may be bemoaning the recent closure of a few key high-end Brisbane CBD restaurants, however there are some interestingly positive figures that have been coming out of the CBD retail sector but may not have hit the mainstream headlines.

People's spending (or lack of) is often considered a key indicator for the general consumer sentiment 'on the streets', and it is here that 2nd Quarter figures* have shown a surprising increase – Queensland retail spend increased by 2.6% year-on-year. The key two areas of main increase were 14.8% for food (surprisingly, in light of the above-mentioned closures) and an 11.1% increase in household goods spending.

"As a result of the pick-up in food and beverage retail spending, we are seeing many new ready-to-eat food concepts such as Guzman Y Gomez, Pita Pit, Gurts Frozen Yoghurt Bar and Sumo Salad looking to secure a presence in the Brisbane CBD as well as other prominent retails markets", explained Peter Rossi, CBRE Director of Queensland Sales & Leasing.

"In fashion, international retailers such as Zara, Top Shop and Uniqlo are also showing strong interest in the Brisbane CBD – particularly the Queen Street mall, which remains the successful retailing mall in Australia."
And for all you fashionistas out there, Cartier is set to open its largest store in Australia next year on the corner of Edward and Elizabeth Streets in Brisbane's CBD.

In addition, the actual population growth remains a key factor to economic growth too. "Strong population growth of 2.2 % in the year to December 2012 means economic prospects remain largely positive, with recovery from the low growth profile of recent years forecast", explained Tammy Smith, CBRE's Senior Research Manager.

But it's not just these factors that give rise to a more positive outlook: it's also the attitude to spending and what TYPE of spending that is more cause for prolonged and sustainable growth. "The shift in consumer spending patterns from discretionary to non-discretionary spending would provide a further boost to the Queensland retail market. The market is recalibrating after a sustained period of high consumer spending where, since 2007, household gearing ratios reached almost 155% of the annual household income.

"The accumulation of debt, which allowed consumer spending growth to exceed income growth for a decade and a half, has come to an end. As the market adjusts to a more sustainable rate of growth and retail spend, there had been a notable shift away from discretionary spending to non-discretionary", Ms Smith detailed.

What does this mean for property?

Firstly it is interesting from a commercial property investment point of view but I see it even more pertinent for the general economy and consumer confidence. It basically means that although there appears to have been a lot of hesitation and restrain in various market segments this year, this has not reflected in what people are actually doing i.e. spending more.

As we've seen over and over again, the perception and real underlying sentiment within the economy often reflects residential property buyer sentiment within our marketplace.

It is definitely a cause for quiet optimism.

Although traditionally many eyes look at the US and their economy we should be keeping an even keener eye on the key Asian economies and our key trading partners. The sheer number of people in these countries and their demand for certain products and resources will play a stronger and stronger role in Australian economics now and in the future. We're already seeing this in the increasing demand for off-the-plan residential property by many Asian nationals as well as their interest in the established property market.

* CBRE's Australia Retail Market View Q2 2013

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