Chinese investment firm Citic Capital Holdings Limited and Portuguese mall operator Sonae Sierra recently announced a new joint venture to lease and manage shopping centres in China. The new company intends to provide services to the owners of the millions of square metres of new mall space being added to the China market each year.
Sonae, which owns 47 shopping centres globally and manages a total of 85, hopes to bring its international experience to play in Citic’s home market. State-owned Citic was the earliest Chinese investment firm after the market opened up in the 1980s, and was ranked no. 172 in last year’s Fortune Global 500 with assets of RMB 225 billion (US$36.3 billion) on the mainland.
Commenting on the newly signed joint venture, Citic Capital president, Zhang Haitao said, “This strategic partnership with Sonae Sierra will further strengthen our retail asset management capability, supporting our growth strategy in the retail property space in China, and bringing long-term value to our investors.”
China is already the world’s second largest retail market with total retail sales of consumer goods amounting to RMB 20.7 trillion last year. A recent survey found that more nine out of the ten leading cities for the completion of new mall space last year were in China, and the country also leads in terms of the amount of shopping centre space currently under construction.
Despite the high overall rates of growth, however, many developers are discovering that malls are challenging to manage and lease out efficiently, creating an opening for retail asset managers such as Sonae Sierra, as owners look for ways to ensure that their projects will thrive.
Citic Group is planning to list on the Hong Kong stock exchange this year by by injecting assets into its existing Hong Kong-listed subsidiary, Citic Pacific. The company had net profit of RMB 34 billion ($5.5 billion) last year.
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