Westfield sales flat amid soft spending Westfield Group has reported flat sales from its Australian business in the first quarter, to March 31, due to the timing of the Easter break and ongoing softness in consumer spending. Rents on new leases, of about 2.2 per cent of the group, were 5.1 per cent lower. The group had signalled a potential decline in new lease deals at its full-year results in February. Westfield shares were up 0.2 per cent at $12.03 in afternoon trade. The figures come as Sydney, Melbourne and Brisbane made a list of the top 10 global cities with the most expensive prime retail rents, according to CBRE research. The first quarter survey, which tracks the top 10 most expensive prime global retail markets, revealed that strong demand from international retailers, coupled with a modest supply pipeline, led to record-high prime rental rates. Leading the pack, Hong Kong ranked in a rental class well above its peers, recording prime rates during Q1 2013 of $US4328 a square foot a year. CBRE's regional director of retail services, Josh Loudoun, said the Australian retail market had been buoyed by continued interest from international retailers, but more encouraging was the return of occupier demand from domestic retailers. "We attribute this to a few key factors, including the fact that annual retail sales growth is back in line with longer term averages," Mr Loudoun said. Retailers are reporting far greater consistency in sales and this is providing a base level of confidence not seen since 2010. Last week's interest rate cut will further support consumer spending, as will the uplift in inbound tourism, particularly from China, given the growing affluence of middle class Chinese and their affinity for high-end retail. Mr Loudoun said vacancy rates in "super prime" retail markets in Australia's capital cities remained extremely low, with only one or two new leases being signed in any 12 month period. "This lack of supply is what creates competition among the handful of retail categories that can sustain the high occupancy costs in the super prime market," he said. However, Mr Loudoun said Australia's high, super prime rents were the major barrier for new market entrants. Many international brands find that our high occupancy costs combined with the fact that we have some of the highest labour costs in the world, mean that Australia's super prime markets are not viable. We have seen this with groups like Hollister choosing to target shopping centre locations and with Top Shop opening on Chapel Street, Melbourne and Williams-Sonoma opening its first Australian store at Bondi Junction in Sydney. Westfield reaffirmed its 2013 forecast of earnings growth at 3 per cent, equal to about 66.5¢ on a funds from operations per security calculation. The full-year distribution forecast remained at 51¢ per security. During the quarter, the retail behemoth began $700 million of new projects including a $400 million redevelopment of Mount Gravatt in Brisbane and $240 milllion on US centres. But the group decided not to proceed with its Brazil joint venture, although it remains committed to the region. It said that while retail conditions remain subdued, the productivity of the portfolio is high at $863 a square metre, with continuing demand from domestic and international retailers. It has been suggested the European label H&M is keen for space along Pitt Street Mall if such a site can be found in the Westfield Sydney mall. In Australia comparable specialty sales rose by 0.1 per cent; in New Zealand they fell 1.3 per cent. For the US, sales rose 5 per cent.