After achieving record deal volumes in 2017, outlet malls should continue to grow in popularity with investors, hallmarked by 'constrained supply and growing demand', according to new research from TH Real Estate.
The Think Global: Outlets report 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 €548 mln.
According to the data, it has been the strongest performing sector in the region over the past decade and is likely to remain one of the best value property sectors. Many prime outlets achieving valuation yields 75 basis points higher than their shopping centre counterparts, the report noted.
'Outlets have proven to be a more defensive investment, with relatively low levels of volatility as seen during the last economic cycle,' said Angela Goodings, director of research at TH Real Estate.
'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.'
During the global financial crisis, sales only fell by 0.5% compared to the European average of -5.4%.