Retail landlord Vicinity Centres has reported a rise in sales and visitors across its malls, particularly in its hard-hit city portfolio, in defiance of the challenging economy.
Australia’s second-largest shopping centre owner and manager, which partly owns the mega Chadstone mall in Melbourne’s south-east, saw overall sales rise 13 per cent compared to the same time last year, but the group warned the higher cost of living, including increased interest rates, could bite in the coming few months.
The ASX-listed Vicinity has a market value of $9.5 billion and has $24 billion in retail assets under management across 60 shopping centres.
Vicinity’s recently appointed chief executive Peter Huddle said in the third quarter update that the return of workers to the city offices during the week and more visitors coming into town on the weekends had boosted sales in what was a lagging part of the business.
Huddle said that despite ongoing headwinds with higher interest rates, the full-year earnings outlook is expected to be at the top end of the previous guidance of between 14¢ to 14.6¢ per security.
“It was particularly encouraging to see the positive momentum in CBD visitations during the quarter, which underpinned a 37.2 per cent uplift in CBD sales and in fact, our CBD portfolio was a key contributor to our overall portfolio sales performance,” Huddle said.
“The Australian retail sector has once again demonstrated its resilience in the face of rising household costs and heightening near-term macroeconomic uncertainty.”
Spending on luxury handbags, accessories and apparel was again strong, while department stores sales growth was up 8.3 per cent and specialties stores were up 17.7 per cent.
Chadstone, which is co-owned by billionaire John Gandel, delivered 20.3 per cent growth, boosted by the $70 million Social Quarter precinct’s 17 new entertainment and dining tenants which sit across 10,350 square metres of expanded space. The mall also has a luxury hotel managed by Accor, and is the new home to Officeworks’ head office.