A Vanke representative presiding over the Shenzhen event
China Vanke may have lost its founder and CEO last week, but the country’s second-largest developer by sales is also flexing its muscles in the retail property market.
After leading a $1.9 billion acquisition of the Blackstone-controlled mall platform SCP Group last year, Vanke recently held a coming out party for its Longcheng Vanke mall, the first project marketed by the Shenzhen-based retail specialist since the deal.
The milestone in the company’s ongoing expansion into commercial real estate comes at almost the same time that Vanke is undergoing a major leadership change, as CEO Wang Shi announced last week that he would no longer be a board member of the 33-year-old real estate developer.
Vanke’s diversification into commercial property had been a major focus for Wang in his last years at the company, and the proof of that strategy seems apparent in the debut party for the expansion of its Shenzhen retail property.
Vanke Celebrates Leasing of Mid-Range Mall
Longgang Vanke Plaza is now said to be 60% leased
Longcheng Vanke is a two-storey mall spanning 50,000 square metres that includes leisure, sports, entertainment and F&B elements.
The mall is now more than 60 percent leased, according to a Vanke executive who presented at the event, with the project’s tenants coming primarily from among well-known international brands including Decathlon, Adidas, and Nike, as well as from hip homegrown food and beverage outlets including Gebama and Naixue Tea. Slated to open by this coming December, the mall also features a China Film Stellar movie theater.
The property in Vanke’s home city of Shenzhen builds upon the company’s experience with Longgang Vanke Plaza, a mid-end shopping center located nearby that opened in December 2013. Both retail facilities form part of Vanke’s larger Jiuzhou mixed-use project offering 1.8 million square metres of residential, office, leisure and education space adjacent to the Longcheng Square metro station. The project, in the core commercial area of Shenzhen’s Longgang district, is about an hour by metro from the city’s business and administrative center in Futian district.
Mainland Homebuilding Giant Is Building Up its Retail Portfolio
Last September, Vanke committed about RMB 4.9 billion ($583.1 million) of its own funds to the $1.9 billion acquisition of the SCP Group (SZITIC Commercial Property Co) from private equity giant Blackstone in partnership with other firms. Blackstone in 2013 had picked up a 40 percent stake in SCP, an owner of mid-sized community shopping malls in decentralized areas. The developer was joined in the investment by a consortium of financial backers.
As of 2016, Vanke’s retail portfolio included 91 operating projects and 67 planned projects in 35 cities across the country, covering a total of 4.33 million square metres. Vanke’s SCP arm is reported to have five operating projects in Shenzhen, with a number of additional properties in the pipeline across the city.
Fifteen new high-end shopping malls are expected to launch in Shenzhen during 2017, with 55 percent of the space being located in decentralized areas, according to a recent market report by global property consultancy Savills. “The large influx of new supply in 2017 is expected to put downward pressure on rents and occupancy rates in the second half of the year,” wrote Robert Ritacca, a senior manager with Savills Research in the report.
The city-wide retail occupancy rate stands at 94.8 percent in the first quarter of 2017, after sliding 1 percentage point from the previous quarter, according to Savills.
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