MAPIC 2015: China’s shopping centre space is set to grow to more than 400m sq m (4,300 sq ft), Cushman & Wakefield director of tenant representation in China, Sara Gougarty, told an audience at MAPIC in Cannes today.
“China has more projects under development than the total capacity of the US and Europe combined,” said Gougarty.
She said that what was a small market of around 15m sq m not too long ago, would increase to 100m sq m by 2017 and quadruple in size over the following years.
That massive growth, fuelled by a booming middle class population, continues to open up opportunities for overseas retailers seeking the break into the lucrative market.
There will be more than 230m middle class citizens in China within the next five years, said Gougarty, the fastest growth in that demographic in the world.
Chinese mall developer SCPG, which is majority owned by US private equity giant Blackstone, said it was taking advantage of the growth in the middle market to expand its business, particularly its InCity brand of malls.
InCity malls are typically located in China’s second tier cities and span 150,000 sq m.
Leo Ding, chairman and chief executive of SCPG, was at MAPIC for the first time to talk with overseas retailers.
“Retailers should come to China because they can make a profit,” said Ding. “The market is really big and we offer a good platform for them to sell their products.”
“In our 12 years of operations, we have had double digit growth every year,” he added.
Both Apple and Under Armour are in discussions with SCPG to take space in its malls.
SCPG currently operates 33 shopping centres across China’s first- and second-tier cities and has a further seven in development.
Lawrence Hutchings, a managing director at Blackstone charged with looking after its retail assets, said the private equity firm was very acquisitive. He said Blackstone was keen to increase its investment in SCPG but that it was unlikely to bring the Chinese mall developer overseas due to the size and opportunities available in China.
However, Gougarty warned retailers that they only really had one opportunity to enter the Chinese market properly.
“The opportunity for retailers in China is strong,” said Gougarty, “but the million dollar question is ‘how am I going to do it?’ You have to make sure that you pick the right partner and the right places as there is going to be a lot of oversupply.”
