In the US, the Friday after Thanksgiving is the biggest shopping day of the year as consumers throng malls looking for holiday bargains.
For US private equity pioneer KKR and Chinese developer Sino-Ocean, Black Friday’s combined bill came to $191 million after the pair announced on November 25th that they are taking up stakes in Chinese retail outlet mall developer and operator Beijing Capital Juda.
Sino-Ocean took a 16 percent share while KKR acquired a 12 percent stake in the retail subsidiary of Beijing Capital Land subsidiary, which was spun off from the mainland property firm in 2014.
Capital Juda stated that the investment will help it continue on with its plans to develop outlet mall projects in 20 mainland cities over the course of the next five years. At the moment, Hong Kong-listed Beijing Land has developed four outlet malls but has yet to transfer any of those assets to its subsidiary.
The budding outlet mall player has acquired a few projects and sites during the past few years, including Xi’an First City in the Shaanxi province, which it is currently developing. Capital Juda has also purchased commercial sites in Wuhan and Hangzhou and invested in a project in Changsha.
Capital Juda Rushes into a Crowded Outlet Market
In announcing its new funding, Capital Juda threw out a challenge in an increasingly crowded outet market, saying it aims to be the largest player in China within the fast-growing space. To win this prize, the upstart will have to beat out more established competitors, including the Florentia Village chain, which is backed by global property investment manager TH Real Estate and their Hong Kong-based partner, Gaw Capital.
Earlier this year, the Florentia Village team announced that they had teamed up to form the $2 billion China Mall Outlet Fund. The new fund aims to build on the success of the chain of Florentia Village suburban shopping venues set up by Silk Road Holdings, a joint venture between TH (which was formerly known as TIAA-Henderson Real Estate), Gaw Capital and Italy’s RDM Group.
Two of the existing Florentia Village projects held by Silk Road were injected into the new fund to get it started with the partners aiming to build it up significantly during the next five years.
As Chinese Shoppers Hunt For Bargains, More Developers Turn To Outlet Malls
These continue to be lean times for traditional retailers with a total of 138 department stores and 9,464 clothing stores closing in China between 2012 and 2015, according to data from the Business Economics Institute under Beijing Technology and Business University. However, shoppers remain on the hunt for discounted luxury goods and several outlet mall operators are looking to cash in on this.
American-owned European outlet mall developer Value Retail opened two outlet malls in China during 2014 including what was at the time the largest such complex near Shanghai Disney Resort.
Meanwhile, local mainland outlet builder Sasseur received a $100 million investment from LVMH’s L Capital investment fund in 2014, which it is using to build as many as 20 new malls during the next few years.