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Westfield enters Italy with new shopping development

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Westfield is making the second foray into a new market in a week, spending $160 million to buy into a development site in the northern Italian city of Milan for a regional shopping centre.

Westfield said it would buy a 50 per cent interest in the site, which already has planning approval for “a world class iconic regional shopping centre similar in scale and quality to Westfield London”.

Westfield chairman Frank Lowy said the deal was “a unique opportunity… to establish our franchise in one of the wealthiest population centres in Europe.

“We believe that this site represents one of, if not the, best shopping centre development opportunities in Continental Europe,” Mr Lowy said on Friday.

Milan is Italy’s major financial centre with the country’s highest income demographic. It is one of the world’s fashion capitals.

The 60-hectare site, next to Milan’s Linate airport, is being acquired in joint venture with Gruppo Stilo (GS), an Italian developer and owner of major retail brands.

Westfield managing director, UK/Europe and New Markets, Michael Gutman, said Milan’s “strong consumer demographic and very low penetration of shopping centre space” provided “an exciting opportunity to develop a unique shopping centre” similar in quality and scale to Westfield London and Stratford City.

Westfield will spend $160 million in two stages, with $90 million initially and the remainder when the development begins.

The company said it expected the project to begin in 2012/13 for completion with the Milan World Expo in 2015.

Westfield expects to invest a total $A1.37 billion to $A1.71 billion in the 170,000 square metre project, with a target yield in the of seven to 7.5 per cent.

The centre will be branded Westfield Milan and will be managed jointly by Westfield and GS.

Westfield said it expected to invest a further $A27.32 million in acquiring additional development rights, payable when a second stage project of approximately 60,000sqm commences in the future.

On Wednesday, Westfield announced its entry into the Brazilian market, with a joint venture with a local developer and shopping centre operator, much like its deal in Milan.