CapitaLand Retail, CapitaLand's wholly owned shopping mall business, has announced that it has clinched two new management contracts in China. In Guangzhou, CapitaLand will be adding its first managed mall to its fast-growing portfolio comprising CapitaMall SKY+ and CapitaMall Rock Square (acquired January 2018). In Chengdu, CapitaLand will expand its network of malls to seven with the addition of its second managed mall. These partnerships deepen CapitaLand's presence in two of China's fastest-growing cities and fortify its retail network by adding over 1.2 million square feet (sq ft) of gross floor area (GFA) excluding car parks.
Wilson Tan, CEO of CapitaLand Retail, said: "Since announcing in August 2016 our intent to grow our retail footprint through management contracts, CapitaLand has signed 10 agreements with a total GFA of about 5.3 million sq ft. The growth momentum attests to the scalability and the value of CapitaLand's best-in-class retail operating platform. With these new contracts, CapitaLand will further strengthen its leasing synergies across the portfolio of malls and increase its reach to the high-growth retail markets in Guangzhou and Chengdu. Including these two managed malls, 47 of our 51 malls in China are in first- and second-tier cities. This is in line with our commitment to grow our retail portfolio with a focus on dominant assets located in core cities clusters."
In Guangzhou, CapitaLand will manage the retail component of The Grand City, a landmark integrated development in Wanbo CBD in Panyu District, on behalf of Guangzhou Wan Shun Investment Management. Wanbo CBD is an up-and-coming regional business centre that has been attracting investments under the government's masterplan. With this contract, CapitaLand's retail network in south China comprises five malls, of which three are in Guangzhou, spanning a total retail GFA of 3.6 million sq ft.
In Chengdu, Chengdu Lide Commercial Industrial has appointed CapitaLand to manage a low-rise shopping mall in Qingyang District, a business and cultural centre. The strategically located mall is less than two kilometres from Tianfu Square in the city centre. This agreement marks CapitaLand's seventh mall in Chengdu and its second managed mall in the city after CapitaMall Leshijie, which CapitaLand signed on to manage in June 2017. Across west China, CapitaLand owns and manages 11 malls, spanning 11.3 million sq ft in retail GFA. These include the operational Raffles City Chengdu and the upcoming Raffles City Chongqing, which has set a world record for the tallest horizontal skyscraper linking the most number of towers.
Tan added: "CapitaLand continues to be positive about China's retail sector, which is experiencing growth in both offline and online sales. Our expansion strategy enables CapitaLand to seize growth opportunities with agility while reaping economies of scale. We will continue to identify opportunities to grow our retail operating platform, reinforcing our position as the region's leading mall operator and complement CapitaLand's core business of owning and developing shopping malls."
In 2018 CapitaLand targets to open five malls in China, spanning a total retail GFA of about 4.2 million sq ft. They are CapitaMall LuOne and Alibaba Shanghai Center in Shanghai, CapitaMall Tiangongyuan in Beijing, CapitaMall 180 in Foshan and CapitaMall ONE in Changsha.
China's economy has been transitioning towards a consumption-led model. In 2017, China's GDP grew 6.9% y-y to 82.7 trillion yuan. Consumption accounted for 58.8%. National retail sales increased 10.2% y-y to 36.6 trillion yuan, while national urban disposable income and expenditure per head grew 6.5% and 5.4% respectively. Guangzhou's economy grew by 7.0%; urban disposable income per head and expenditure per head grew by 8.8% and 9.0% y-y respectively. Chengdu's GDP and urban disposable income per head increased by 8.1% and 8.4% y-y respectively.
