China’s shopping mall operators warned of looming lost decade
July 17, 2017 Category Retail, Weekly
Shopping mall operators in China are bracing for a difficult decade as their retail tenants continue to lose market share to online vendors, suggesting little room to push up leasing rates in line with historic trends, according to Henderson Land Development Vice Chairman Peter Lee. “There are already fewer visitors going to shopping malls in remote areas,” Lee said at a Hong Kong forum last month. And with advertising now increasingly switching over to online and mobile, Lee added that income from shopping malls will continue to suffer because retailers would turn to China’s tech giants Baidu, Alibaba and Tencent, rather than renting physical space in a shopping mall. “In the next 10 years, we are not hopeful that we can raise rental rates,” he said. “It will have a serious impact on our income.” Henderson Land owns 91 million square feet of office and shopping malls in 14 Chinese cities. China’s e-commerce sector – the world’s largest – is equivalent to the combined size of the next six biggest markets, including the United States, Britain, Japan, Germany, South Korea and France. China’s online retail sales are expected to rise to USD812 billion in 2017, accounting for 17% of the nation’s total retail sales, according to a June report by global consultancy McKinsey & Co. Maureen Fung, Director at Sun Hung Kai Properties (China) said mall operators have unique advantages that can be expressed through the physical environment. SHKP is to build a 3 million sq ft high-end shopping mall in its mega 7 million sq ft integrated project, Xujiahui Center in Shanghai, the South China Morning Post reports.
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