Melbourne's Chadstone the Most Profitable Shopping Centre in the Country

The Vicinity Centres and Gandel-owned Chadstone in Melbourne is the nation's most profitable shopping centre according to the Big Guns survey for 2019.

In what many analysts have described as a horror year for bricks and mortar retail, falling house prices, increased competition from ‘online’ retail, stagnant wage rises, have all contributed towards a sharp fall in consumer confidence.

At the same time for players in the retail sector, getting access to finance, both debt and equity, is more difficult than it has been at any time.

Yet, Australia's Big Guns are continuing to defy the odds and draw in shoppers, dinners and people looking to be entertained.

Chadstone, which attracts 24 million annual visitors including 450,000 international shoppers, has retained its top spot with a turnover of $2.1 billion, marking a 10 per cent increase on last year’s figure.

The figure comes exactly 10 years after it became the first shopping centre to break the $1 billion milestone.

The centre has now doubled its sales every decade for the past 30 years.

Related: AMP Kicks Off $800m Shopping Centre Expansion

Melbourne's Chadstone shopping centre is the most profitable mall in the country
Melbourne's Chadstone shopping centre is the most profitable mall in the country

Sixteen of the top 20 centres to make the Big Guns survey showed an increase in moving annual turnover over the yaer with Scentre Group’s Westfield Chermside’s performance up 10.2 per cent Westfield Sydney up 5.8 per cent and Westfield Bondi Junction up 4.7 per cent.

GPT's Melbourne Central that has risen in the ranks to be the most profitable on a sales-per-square-metre measure, narrowly knocking off the long-standing Broadway Centre in Sydney.

Melbourne Central had a 12 per cent improvement to take it to $14,763 per square metres.

The Melbourne centre just pipped Mirvac’s Broadway shopping centre in Sydney at $14,405 per square metre which had held the top spot for the past six years in a row.

Related: Sub-Regional Shopping Centres Struggle in New Retail Landscape

Top 5 MAT (Moving Annual Turnover) million

Centre20182019% Change
1. Chadstone, VIC$1.94bn$2.13bn10%
2. Westfield Sydney, NSW$1.18bn$1.25bn5.8%
3. Westfield Bondi Junction, NSW $1.09bn$1.14bn4.7%
4. Westfield Fountain Gate, VIC $1.03bn$1.05bn1.6%
5. Westfield Chermside, QLD$930m$1.02bn10.2%

“Look at the performance across the globe; one of the world’s best centres in terms of return on investment, was Bluewater in Kent, UK – developed and managed by Australian teams,” SCN publisher Michael Lloyd said.

“Look at Westfield in America, they changed the whole US shopping centre scene and most of those guys are today’s Scentre Group.”

“In Dubai, nearly all the major centres there were developed and managed by Australian teams.”

Chadstone shopping centre will continue to bolster is position as a Big Gun with completion of its $130 million MGallery by ­Sofitel hotel in ­November.

The 12-storey, 250-room hotel, named Hotel Chadstone Melbourne, is one of many strategies by Vicinity to create mix-use precincts in an aim to accommodate Melbourne’s growing tourism market with 12.8 million domestic and international visitors.

Construction has also begun on ‘The Link’, the covered pedestrian walkway connecting Hotel Chadstone Melbourne with the retail precinct and Tower One – Chadstone’s commercial office tower.
Construction has also begun on ‘The Link’, the covered pedestrian walkway connecting Hotel Chadstone Melbourne with the retail precinct and Tower One – Chadstone’s commercial office tower.Image: Vicinity Centres

Opportunities in the retail sector

Earlier this year, Vicinity Centres devalued its $15.8 billion portfolio by 0.2 per cent, a decline of $37 million over the six month period.

The nation's second largest mall landlord attributed the write-down to its regional, sub-regional and neighbourhood malls as well as continued softening in capitalisation rates.

The write-down comes amid a challenging retail environment, with cautious consumers worrying about sluggish wage growth, a seismic shift in shopping habits and the rise of giants such as Amazon.

Over the course of 2018, Australia and New Zealand saw a 15 per cent decline in shopping centre visits compared with the previous year, according to a UBS survey.

Thirty seven per cent of Australian respondents said they wanted better parking facilities, more parking spaces and lower parking cost, while just 25 per cent wanted more services and 24 per cent more dining.

UBS said its findings suggested landlords should focus more heavily on cutting up underperforming department stores and discount department stores to boost variety and services while spending more on parking to improve access.


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