Outlets are the star of the retail sector, says TH
In a new research report, TH Real Estate contends thats outlet malls will continue to grow in popularity with investors, as the sector is underpinned by constrained supply and growing demand, offering some of the most attractive risk-adjusted returns in the real estate market.
The research highlights that 2017 saw the highest level of outlet mall transactions in Europe ever recorded at €1.7bn, with volumes three times the long-term average of €548m. According to TH Real Estate, it has been the strongest performing sector in the region over the past decade and will remain one of the best value property sectors with many prime outlets achieving valuation yields 75 basis points higher than their shopping centre counterparts.
TH Real Estate believe the sector is well placed to outperform in periods of strong and weak economic growth, demonstrating excellent resilience in the poor market conditions of the Global Financial Crisis, when sales only fell by 0.5% compared to the European average of -5.4%.
Angela Goodings, director of research at TH Real Estate, said: “Outlets have proven to be a more defensive investment, with relatively low levels of volatility as seen during the last economic cycle. They provide consumers with a shopping experience, with operators invested more in catering facilities to increase dwell time, alongside marketing events which improve footfall. Therefore, we believe the sector is also defensive to the ongoing diversion of retail sales to the internet. Where we have been able to analyse data, high-quality assets have outperformed in terms of sales and rental growth as well as investment returns.”