BEIJING - Singapore's
CapitaLand, Southeast Asia's largest property firm, is
investing nearly US$120 million to cash in on China's
prospering retail property.
Through its
indirectly wholly owned subsidiary CapitaRetail China
Investments Pte Ltd, CapitaLand signed a co-operative
agreement with Shenzhen International Trust &
Investment Co Ltd (SZITIC) to enter into two joint
ventures to acquire and manage a portfolio of retail
malls in China, said a news release sent by the company
to China Daily.
The SZITIC, a state-owned trust
and investment firm, owns a 35% share in Wal-Mart
operations in parts of China.
The two sides will
be able to jointly investment in project companies to
develop retail malls, which will be anchored by the
Wal-Mart chain of supercenters, the company said.
For the first batch, CapitaLand has entered into
six projects being developed by SZITIC. CapitaLand will
take a 51% stake in these projects, which need an
investment of about 983.88 million yuan ($119 million).
The six mall projects are expected to become
operational from mid-2005 to early-2006 and each will
have a floor area of between 40,000 and 70,000 square
meters.
The company expected these malls to
generate a property yield of more than 9%.
In
addition to the six developments, CapitaLand and SZITIC
will also develop a further 14 retail malls worth about
$512 million within a year, comprising an estimated
total floor area of 700,000 square meters.
CapitaLand is also granted the first right to
acquire a majority of the retail malls to be anchored by
Wal-Mart, which the SZITIC may propose to develop after
January 2005.
Wal-Mart, which operates 38 stores
in 18 Chinese cities, is aiming to open 20-30
supercenters in China in the coming four years.
Analysts said they believed the investment of
CapitaLand is an effort to ride the fast expansion of
retail malls in China.
Xu Xiaofang, an analyst
from Guotai and Jun'an Securities, said foreign
investment in retail business will enter quick expansion
since most restrictions were lifted on December 11, when
China announced the removal of restrictions on foreign
investors' shares in commercial business and the stores'
locations.
"Many foreign retailers are prepared
to invest more as they are allowed to set up wholly
owned retail business," Xu said.
Xu said he
expected foreign retailers to open more stores in
second-tier cities in China's middle and western
regions, adding that these regions will need more retail
properties.
Xu predicted retail sales by
foreign-funded companies will account for 7% of China's
total retail sales in three years.
(Asia
Pulse/XIC)
Dec 25, 2004
No
material from Asia Times Online may be republished in any form without written
permission.
Copyright
2003, Asia Times Online, 4305 Far East Finance Centre, 16 Harcourt Rd,
Central, Hong Kong
