Keppel Land China still sees some value in China’s much-maligned retail real estate sector – agreeing last week to purchase a newly-completed mall in suburban Shanghai for RMB 500 million ($74.9 million).
The acquisition by the Singaporean real estate investment firm of the 40,927 square metre (440,000 square foot) shopping centre in Jiading district came just two weeks after Keppel and its fund management affiliate Alpha Investment Partners reported that they had sold a stake in a commercial complex in Pudong’s Jinqiao area for $517 million.
In the statement, Keppel Land CEO Ang Wee Gee explained that the deal is part of the firm’s strategy to acquire retail projects in key Chinese cities like Shanghai, and to leverage its property management capabilities to add value. Keppel Land China has appointed its retail management division to run the complex.
Life Hub Moves on for Keppel Land
The purchase of the Jiading project allows Keppel to reinvest a significant amount of its share in the proceeds of the disposal of an 80 percent stake it held in Chongbang Group’s Life Hub@Jinqiao project.
While Alpha held 57.5 percent of that stake through a closed-ended fund, Keppel’s 42.5 percent of the shareholding would have left the developer with over $219 million of cash in its pocket after Chongbang agreed to buy out the Singaporean investment team.
Singapore Investors Not Ready to Give Up on China retail
Keppel’s decision to plow its deal proceeds back into the retail sector follows soon after another Singaporean investor added to its China shopping centre portfolio.
CapitaLand Retail China Trust, which is part of the city-state’s Temasek Holdings, announced just this week that it has completed its acquisition of the Galleria Chengdu in Sichuan province for RMB1.5 billion (US$225.7 million).
The acquisitions by the Singaporean firms come as China struggles to deal with slowing growth in retail sales and the impact of the world’s largest supply of new brick-and-mortar shopping complexes. While the mainland’s pipeline of new malls due to come online in the next three years is estimated to exceed 40 million square metres, Keppel and CapitaLand appear to be keeping the faith in international grade projects in select Chinese markets.