TH Real Estate, the property division of investment giant TIAA-CREF, announced late this week that it had opened its third outlet mall in China, as rising consumption on the mainland continues to drive retail growth.
The 118,000 square metre (1.3 million square foot) Florentia Village Designer Outlet Mall in Guangzhou will be home to more than sixty international brands in southern China, including Lacoste, Nike, Etro, Calvin Klein and Versace, according to a statement from TH.
The Guangzhou project is the latest outlet mall for the consortium of investors and managers behind the Florentia Village series of malls, and despite reports of a fall off in sales of luxury goods, the group has said that it expects to build a total of seven such retail destinations across China by 2017.
Outlet Malls Arrive in Southern China
Florentia Village Designer Outlet Mall in Guangzhou was invested on behalf of real estate investment joint venture, Silk Road Holdings and managed by RDM Asia, the Asian real estate development arm of Italy’s Fingen Group.
“Designer outlets have been one of the most widely misunderstood, but strongest performing, real estate sectors over the past decade and, relatively speaking, they thrived during the global economic downturn,” said Mike Sales, Head of TH Real Estate. “Strong demand from international retailers means the occupier base is broadening and covenant quality is improving,” he added.
TH calls the new retail venue “the first authentic Italian luxury outlet in southern China,” and the project is believed to be the first such complex in southern China to be wholly foreign-owned and operated.
Silk Road Holdings is an investment consortium made up of Italy’s Fingen Group, Luxemburg-based vehicle owned by Jacopo Mazzei, Gaw Capital Partners from Hong Kong, and the Sino-US Waitex group, as well as a major US institution.
TH Real Estate, which acted as an advisor on the deal, operates independently from its parent institution, TIAA-CREF, a Fortune 100 financial services firm based in New York.
Outlet Malls Continue to Spread Across the Mainland
The Guangzhou Florentia Village opening follows the company’s second project, which was launchd in Shanghai earlier this year. The first of the Silk Road outlet malls was opened in 2011 in Wuqing Tianjin. By 2014, the Tianjin project is said to have registered RMB 2.14 billion worth of sales and attracted 4.3 million visitors.
Despite shifts in China’s economy that have seen GDP growth rates taper from 10.6 percent in 2010 to 7.4 percent in 2014, consumption continues to rise. Retail sales increased from RMB 15.7 trillion in 2010 to RMB 27.2 trillion in 2014, according to official figures from the National Bureau of Statistics.
This rise in retail has already brought a number of outlet mall operators into the fray.
In January of this year, L Capital Asia, a Singapore-based fund manager backed by LVMH Moët Hennessy Louis Vuitton SA invested $100 million into mainland outlet mall operator and developer Sasseur Cayman Holding Ltd.
Both Sasseur and Silk Road are competing with European outlet mall chain Value Retail, which opened its first mainland outlet mall in Suzhou last year, and is expecting to launch a new outlet centre near Shanghai’s Disney Resort in spring 2016.