Outlet centres significantly outperform traditional retail

Outlet centres are proving to be a booming segment for developers and retailers across Europe, according to new research presented at the third annual International Council of Shopping Centers (ICSC) Outlet Conference in London.

The research report presented at the conference by retail analysts Ecostra shows that UK's Bicester Village, operated by Value Retail, is the top performing outlet centre in Europe and that Germany was the most promising upcoming market for retail tenants. The full report will be published by CB Richard Ellis in November.

Several announcements were made during the conference including plans by Poland-based Fashion House Outlet Centres to build a second outlet centre in Bucharest, Romania as well as in Moscow and St Petersburg in Russia, and in Kiev, Ukraine, all of which it hopes to have out of the ground within two years.

Around 24 outlet centres are slated to open over the next year in 13 countries, including Croatia, Bulgaria and Romania, as well as in the more mature markets of France and the UK. In Italy, another well-established market, six outlet centres will open over the next 12 months, and developers from the Baltic States, Turkey, Ukraine and Russia are also seeking to bring this retail model to their countries.

Banks are still lending to the sector, but demanding more scrutiny of plans before investing.

Fund manager Henderson Global Investors has built up a EUR 2 bn investment in outlets, after launching its European Outlet Fund in 2004. Speaking at the conference, David Williams, fund manager at Henderson, said that its outlet centre investment has exceeded investor expectations. He added: 'This retail model is understood and accepted by the big banks and we see excellent growth prospects supported by strong demand.'

However, whilst confidence remains in outlets, delegates viewed the wider state of retail with concern, acknowledging that it could be up to 18 months before an upturn. According to conference chair and editor of International Outlet Journal, Linda Humphers: 'Outlets will continue to weather this formidable economy and I expect to see more upscale brands take a leap of faith and jump into outlet retailing.'