Small businesses wishing to operate in Australia’s growing elite suburbs must be prepared to compete for space and offer something unique to survive, according to demographer Bernard Salt.
Salt, an advisor on cultural and demographic trends at KPMG, says it’s not enough for businesses in well-to-do areas to be technically proficient in their offering.
“Residents in these areas have high levels of discretionary spending and often travel extensively, so you need to have something that no one else has,” he says.
Salt’s comment come in light of the latest RP Data Property Pulse report, which shows Australia’s million dollar property market experienced growth of 35% in 2010.
The Perth suburb of Peppermint Grove has maintained its status as Australia’s most expensive suburb with a median house price of $4.6 million, making it almost $1 million more expensive than the Sydney suburb of Vaucluse in second spot.
Of the 212 suburbs with a median price of at least $1 million, 56% were in Sydney while 20% were located in Victoria followed by WA, Queensland, the ACT and the Northern Territory.
Tasmania is the only state without a suburb where the media house price is in excess of $1 million.
RP Data senior research analyst Cameron Kusher says over the past five years, the number of suburbs with a median house price of at least $1 million has increased by 172%.
Kusher says the results highlight that not only has demand and price growth been strong for premium property, but residents are prepared to pay a high price for securing such a property.
According to Salt, a lot of the business opportunities in these suburbs relate to the properties themselves, such as gardening and cleaning.
“I also see opportunity for retailers such as butchers, bakers and grocers – those sorts of businesses that contribute to the operation of the household and the day-to-day functioning of the residents of that house,” he says.
Salt says while he can also see opportunities for corner stores and cafés, residents in wealthy areas may be less inclined to choose restaurants based on convenience.
“The challenge is to try to make your product range appeals to well-heeled clients who will be prepared to pay a premium,” he says.
He says businesses must also be prepared to face a competitive property market and high rents, stating retailers and businesses in wealthy areas are often under pressure to justify their space or their operation on commercial grounds.
“Whether you’re going to be a butcher or a hairdresser in a wealthy suburb, you need to be the best, which means more than just being technically proficient – it’s about your marketing ability to engage that population,” he says.