Originally published by Kim Macdonald in The West Australian, Wednesday 10 July 2024.

The luxury retail market will stagnate this year but return to growth in 2025, with local sales buoyed by Perth’s 33,600 millionaires, according to a new report.

A new luxury report by CBRE said this year’s luxury retail sales across the country will match last year’s record sales, and the medium-term outlook is for a compound annual growth rate of 2.7 per cent until 2029.

But the golden era of luxury growth may be behind us, with the report showing the market’s projected growth rate well below the 5.3 per cent compound growth rate between in the past five years.

Nonetheless, Australia will remain a top luxury retail market, with four States represented in the Henley & Partners top 30 global list of millionaires by city, with Perth ranking 24th, above Brisbane (26).

Sydney (8) had the highest number of millionaires in Australia – defined as those with at least $1 million in liquid, investable wealth – while Melbourne came in at number 15.

The report said the millionaires helped to boost the Australian cash registers of the most exclusive brands to a record $6.2 billion in 2023, after an astonishing 14.8 per cent jump in sales nationally.

The report highlighted potential upside in Perth in the years ahead, with the capital currently accommodating 5.8 per cent of the nation’s luxury outlets despite having 10 per cent of the population.

CBRE head of retail, Fred Clohessy cited Cartier, Dior, Omega and Fendi as some of the relatively recent luxury additions to Perth. Chanel, represented by global ambassador Keira Knightley, opened in the CBD in 2022.

“This ongoing thirst by luxury brands to be located in the city is driven by the City’s nation-leading return of office occupancy, Western Australia’s continued strong economy and population, employment growth and tourism,” he said.

Lease Equity’s Jim Tsagalis confirmed that some new luxury brands were keen to enter Perth, but said sales had slowed locally, as it had globally, over the past six months.

Mr Tsagalis said it was an understandable “pullback” as consumers had become concerned about inflation and interest rates. Speaking from London, he anticipated the lull would be relatively short-lived, particularly in Perth.

“The real test will be mid next year when some of the new luxury brands are fitting out their stores to open in Perth,” he said.

“I think you will find there has ben a step-change in the Perth CBD at a ground level.”

The CBR report said retail tourism, high net worth migrants and younger consumers were also to credit for the strong 2023 luxury sales.

Sheree Griff, CBRE’s head of retail property management & leasing – Pacific, said younger consumers were showing a preference for premium produce over cheaper, fast fashion.

“The trend of younger consumers showing a preference for premium products over ‘fast fashion’ is a key driver behind fashion’s is a key driver behind the robust performance of Australia’s luxury retail market in 2023,” she said.

“Social media, particularly TikTok and Instagram, has become a significant platform for younger consumers to discover and engage with luxury brands.

“Short-form videos and viral content, often featuring celebrities and influencers, heavily influence purchasing decisions of millennials and Gen Z who want to align with fashion trends and brand status.”

The report said luxury consumers are focusing on clothing and footwear, accounting for$4.3b (69 per cent) of total revenue in 2024.

Jewellery and watches account for a quarter of total revenue, with $1.5b in sales in 2024.Luxury luggage has emerged as a big submarket which ahs out performed all luxury markets.

It has projected growth of 9 per cent to 2029, according to GlobalData’s Global Luxury Retailing 2016-2018 report.