International shopping centre group Westfield has expanded into Continental Europe by taking a 50% stake in a EUR 1 bn development in Milan. On completion Westfield Milan will be similar in scale to Westfield London, which offers 150,000 m2 of retail space, the Sydney-listed company said.

The 60-hectare site, adjacent to Milan's Linate airport, is being acquired in a joint venture with Gruppo Stilo (GS), an Italian-based developer and owner of major retail brands, owned principally by its founder Antonio Percassi.

Westfield will invest EUR 115m in two stages to acquire a 50% interest in the joint venture. The partners expect to commence the development in 2012/2013 with a view to completing it in time for the Milan World Expo in 2015. Westfield will manage the shopping centre in conjunction with GS.

Westfield said it the 170,000 m2 project will involve a total investment in the range of EUR 1 bn - 1.25 bn, a target yield is in the range of 7% - 7.5% and an unlevered internal rate of return of between 12% - 15% on the capital invested.

'This acquisition represents a unique opportunity, notwithstanding the volatile financial markets at present, to establish our franchise in one of the wealthiest population centres in Europe,' Westfield chairman Frank Lowy said. We believe that this site represents one of, if not the, best shopping centre development opportunities in Continental Europe.'

Cushman & Wakefield advised GS and Savills advised Westfield.

News of the Milan project comes shortly after Westfield's announcements that it has entered the Brazilian market and formed is taking part in the development of the retail component of World Trade Center in New York. The Australian company opens its Westfield Stratford City mall in September. The 177,000 m2 centre is located next the stadium that will host the 2012 London Olympics.

Westfield has stakes in 124 shopping centres across Australia, New Zealand, the US, the UK and Brazil. The company manages assets valued at more than EUR 43 bn.