THINK Global: Outlets

Angela Goodings, Director of Research, explains why she believes 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. In its latest research, TH Real Estate revealed its outlook on outlet […]

Angela Goodings, Director of Research, explains why she believes 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.

In its latest research, TH Real Estate revealed its outlook on outlet malls, which will continue to grow in popularity for investors as the sector is characterized by shorter supply and increasing demand, offering the most attractive risk-adjusted returns in the real estate market. 2017 saw the highest level of outlet mall transactions in Europe ever, at €1.7bn, 3 times the long-term average of €548m.

Experts 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%. Whilst it is important to understand the attractiveness to investors, we examines the increase in retailer demand and consumer trends. Following the Global Financial Crisis and improved pricing transparency via the internet and heavy discounting on the high street, there has been an increase in value-conscious shoppers globally. Therefore, the outlet mall model is well positioned to grow its share of the rising value-conscious market.