It will use the site to showcase for the first time globally its new retail design concept and launch its new brand ambassadors, actor Chris Hemsworth and Formula One driver Daniel Ricciardo.

The new TAG Heuer flagship at Westfield Sydney continues the brand's retail development strategy in Australia, which saw the opening of a new flagship store in Melbourne's new luxury precinct, St Collins Lane in May, and the first store in the Gold Coast in the newly redeveloped Pacific Fair shopping precinct in November. Another boutique at Chadstone shopping centre in Melbourne is due to open early next year.

The new look for the luxury brand comes as Sydney's CBD continues to lead the way nationally in terms of retail rent growth, recording a 28.4 per cent increase in NSW prime rents for the year to June 30, 2016.

In Melbourne there is also high demand for luxury brands with the opening of St Collins Lane and further north along Collins Street.

Growth in clothing, footwear and personal accessories retailing, strong tourism arrivals and continued international brand entrants are supporting retail trade and rental growth across most central business districts, according to CBRE's second quarter Retail Marketview report.

Leif Olson, CBRE head of retail brokerage leasing Australia, said the strong growth in prime and secondary rents is being supported by heated competition for CBD spaces and low vacancy rates, which are prompting retailers to look for alternative locations.

"The strong CBD demand, particularly being driven by foreign brands, has pushed other retailers into the prime and secondary locations, which in turn has created stronger demand for these sectors and supported rent growth," Mr Olson said.

In contrast, ratings agency Moody's Investor Services has issued a warning for landlords, saying it believes  rising housing prices have created a "wealth effect" that has boosted consumer confidence and encouraged spending.

"But the growth in Australian housing prices appears to be slowing. We expect this slowdown will filter into discretionary retail spending as the wealth effect gets eroded, thereby reducing specialty sales and Australian real estate investment trusts' ability to renegotiate higher rental rates when renewing leases," the Moody's report says.

Pierre Blouin​, TAG Heuer's new general manager for Australasia, said Melbourne and Sydney were considered prime areas of retail growth despite the high rents.

He said the Sydney store was developed by TAG Heuer's in-house design and architectural team in Switzerland.

"Together with our existing Brisbane flagship store, the multimillion-dollar investment across three new flagship stores in 2016 demonstrates TAG Heuer's commitment to retailing in Australia," Mr Blouin said.

Jean-Claude Biver​, TAG Heuer chief executive and president of the LVMH watch division, said Australia constituted one of TAG Heuer's largest and most dynamic markets and "remains one of our top priority markets with further expansion to take place in the future".