We enter the New Year with a similar outlook as we did the previous. While mixed domestic and international economic data during 2016 at times produced contradictory conclusions, and socio-political events on the global stage continue to have respected pundits questioning long-held assumptions, we still see distinct opportunities in an ever changing retail environment.
Renewed optimism in financial markets at the end of 2016 and early into 2017 has been fuelled by positive economic data that suggests the global economy will continue its path towards expansion over the coming year.
We have a deep belief in the ongoing US recovery, driven by increases in household expenditure, and now that the presidential election is behind us. Consumer confidence surged in December after President Trump’s election to its highest level since 2001. There are early indications this confidence will continue throughout 2017.
Our existing US properties are achieving good income growth off the back of robust retail sales, coupled with the US’s sustained low interest rate environment. With strong underlying fundamentals supporting the US household, it is reasonable to assume sustained and robust growth in the world’s largest economy over 2017.
The expansion of our interests in the retail sector across the US is a key element of our investment strategy and we are constantly monitoring prospects in the market – demonstrating our belief in it.
Domestically, house prices continue to rise. In December 2016 they increased nationally by 1.4%, according to the Core Logic RP Data measure, its strongest gain in six months and lifting annual growth above 10%. This continued rise and our own low interest rate environment have reasonably contributed to steady sales growth and strengthening customer engagement results recorded within QIC GRE’s domestic asset portfolio, particularly during busy holiday trading periods.
To maximise asset value we continue to implement a multi-billion asset creation program across our domestic portfolio which is best described as a suite of large-scale urban renewal projects, creating magnetic destinations that engage our communities in so many ways.
The ongoing focus of environmental, social and governance (ESG) considerations for our investors and the communities in which we operate means we will also continue to embed ESG priorities into all aspects of our business decision making.
Reimagining the retail experience in 2017 and beyond
As a future-focused, active asset manager we have instinctively embraced significant changes to our operating environment – none more disruptive or transformative than the constant growth of digital platforms, which has produced the ever changing, digitally-empowered consumer.
While we leverage the value of this digital transformation we remain cognisant of its boundaries and recognise we generate genuine and enduring value by creating places that also fill the gap – embracing and fostering the aspects of human life that digital platforms can’t authentically replicate.
For us, the primary focus of our multi-billion dollar redevelopment program currently underway throughout our domestic portfolio is about creating destinations that provide lifestyle, recreation, entertainment and dining experiences, in addition to an exceptional retail offer – maximising value-add opportunities for our investors and partners.
We are transitioning our assets from centres that focus on transactions to destinations that facilitate our communities to connect, socialise and dwell, evoking a town centre atmosphere. We continue to couple this priority with the delivery of innovation via new-to-market concepts and products that leverage the benefits of shared experiences in physical formats.
A prime example of this strategy in action is our recently completed development at Robina Town Centre, called The Kitchens:
• We have delivered a food retailing first – a multisensory and multifunctional culinary concept that will become a compelling destination for foodies of all generations and one that represents another evolution in the 20-year history of Robina Town Centre
• Locally focused but internationally inspired, guests to The Kitchens can mingle with around 50 fresh food and beverage purveyors, growers, chefs, and artisans, and sample their way around an array of tempting cafes, bars and restaurants in one unrivalled destination that features food luminaries alongside local providers
• The Kitchens is a community hub where consumers can be delighted by new tastes and entertainment experiences each time they visit, which include cooking classes and demonstrations, live music, film, theatre and art
• Spanning two floors and blending indoor and outdoor spaces, and a spectacular sky-roof, this vibrant urban marketplace celebrates fresh, local produce and the theatre of food where consumers can socialise, shop, dine, and be entertained.
Our focus on investing in critical digital infrastructure has also transformed the way we approach design and delivery to create destinations where people can generate shared experiences on multiple platforms. Applying this approach to the use of technology means that our assets intelligently, seamlessly and subtly enhance the experience of those who visit.
Our digital strategy seeks to preserve and enhance asset value through an investment in best-of-breed platforms and technology by:
• Differentiating our business through industry-leading application of technology aimed at improving the experience of our customer, and building stronger connections between them and our retail partners
• Diversifying our business model through the delivery of new digital-based revenue opportunities
• Generating greater insight into the behaviours of customers within our assets and the way they interact with the retail brands – providing valuable data to inform marketing and promotional campaigns.
Championing diversity outcomes
As a member of the Property Male Champions of Change (PMCC) executive working group I am proud of the work being done to tackle the unacceptably low levels of women in leadership positions across the property industry, and the inadequate pace of change. This working group was established by the Property Council of Australia in 2015.
The PMCC initiative commenced with a focus on identifying and understanding the barriers that hold women back from reaching their potential in an industry where female leaders are outnumbered by men at a rate of more than three to one. 48 focus groups involving more than 500 people were undertaken, with the results used as insights to determine high-impact actions.
Within QIC, we have taken action on diversity via own initiatives and based on recommendations generated to date by the PMCC’s working group, incorporating important steps toward providing a supported, engaged and diverse workforce.
Throughout 2017 we will continue to implement our mentoring program, a targeted mentoring and development program for women across our organisation. Since its establishment the program has received resoundingly positive feedback from the more than 200 female QIC employees who have participated to date, with reports of direct and positive impacts on career advancement.
Other important changes underway this year within QIC include:
• Supporting seven senior female leaders and emerging leaders through programs such as ‘Women Leaders in Property’ and ‘100 Women in Property’
• Continuing our focus on pay equity
• Embedding workplace flexibility at QIC, for the benefit of females and males
• Commencing gender reporting to align with the Workplace Gender Equality Agency reporting standard.
Embedding ESG priorities
We are acutely aware of the role our centres play in enhancing our communities, customers, retail partners and small businesses.
In 2017 we will continue to align our strategies and operating procedures with globally recognised standards for ESG and partner with respected organisations to assist us in the delivery of transformative projects that enable us to harness the latest management technology and best practice.
We have a sustained focus on reducing energy, water and waste consumption across our asset portfolio, which incorporates investment in new technology to improve the visibility and quality of monitoring that assists us in creating efficiencies and enhancing systems.
We are also driving a broad range of sustainability and social investment programs through partnerships with community and environmental groups, many of which are achieving exceptional outcomes. Embedded at a strategic level by our executive team and led by our various centre managers across the portfolio, we are empowering these stakeholder groups to deliver change that is valued by the local community, and which represents the causes they believe in.
Delivered through our centres, we’re partnering with our communities to create tangible and valued sustainability outcomes such as:
• Providing 550 retail and hospitality training places to local residents of Toowoomba via a partnership with Grand Central and TAFE South West Queensland
• Allocating 25 lots to avid local gardeners at Hyperdome’s Community Garden in Logan
• Assisting women and children in need to transition to independence at ‘The Sanctuary’ women’s refuge supported by Castle Towers in Sydney
• Engaging local indigenous artists to create works emblematic of the Ringwood community and contribute to the compelling urban destination the new Eastland has become in Melbourne’s east.
Building on our success
We firmly believe we have the right strategies in place to continue to deliver exceptional and sustainable retail destinations, which in turn create mutual value for our retail partners, investors and local communities.
Our active management approach means we will continue to position our assets for growth through substantive masterplanning and digital transformation, which engenders our positive outlook for 2017 and beyond.
