Southeast Asia's largest property developer, CapitaLand Ltd, said yesterday it is teaming up with a Chinese state-linked group to buy and manage a slew of shopping malls whose tenants include Wal-Mart Stores Inc, the world's biggest retailer.
The tie-up is the latest move by the Singapore group to exploit the commercial opportunities presented by China's rapid economic growth. CapitaLand has been active in the country for a decade, investing 12 billion yuan (US$1.4 billion) there since 1994.
"Retail is a huge, huge industry in China ... There is enormous potential, and we have an enormous appetite," said CapitaLand president and chief executive Liew Mun Leong announcing the latest deal.
CapitaLand said it would initially invest 983 million yuan (US$118.8 million) for a 51 percent stake in six malls, which will open between mid-next year and early 2006.
The balance of the joint venture will be held by Shenzhen International Trust & Investment Co, or Szitic, a Chinese state-owned investment firm.
The half-dozen malls will be sited across China in Chongqing in Szechuan Province, Changsha in Hunan, Wuhu in Anhui, Nanhai in Jiangxi, Zhangzhou in Fujian and Maoming in Guangdong, said Szitic chairman Li Nan Feng. Wal-mart will take between 40 percent and 60 percent of the space at each mall.
CapitaLand added that yesterday's agreement covered a further 14 malls that would be added within 12 months, and that more sites -- all featuring a major Wal-Mart outlet -- may be added over the next few years.
Like its major global rivals, Bentonville, Arkansas-based Wal-Mart Stores Inc has been expanding aggressively in China, where it currently has 42 stores in 20 cities. Szitic owns a 35 percent stake in 38 of those outlets.
"With this joint venture CapitaLand will further expand into China's fast-growing retail property market and gain access to quality assets in the relatively untapped provincial cities," said Pua Seck Guan, head of CapitaLand Retail Ltd.
CapitaLand said it might, in one or two years, list shares in its Chinese shopping mall venture on the stock exchange -- a type of investment vehicle that has gained popularity in Singapore in recent years.
"Looking ahead, the properties could form the portfolio of a China retail property fund which has listing potential," said CapitaLand's Liew.