China retail property

Transforming China’s retail sector.

Overview

Rapid urbanisation and the growth of China’s millennial population, have transformed retail in the world’s second largest economy¹. Recognising the opportunity these changing consumption patterns present for real estate investors, MAM has been a leader in the creation of high-quality retail destinations in China for nearly a decade.

Sector Real Estate

Sub-sector Retail

Invested 2011

Location China

Creating retail destinations

China’s retail sector is expected to become the world’s largest in 2019², with growing consumption powered by the country’s more than 350 million millennials³. Despite representing only 25 per cent of China’s population, those born in the last two decades of the 20th century are responsible for 65 per cent of the country’s total consumption growth⁴.

Building on this trend, MAM launched Macquarie China Retail Company in partnership with HIP China Retail in 2011 – aiming to create and curate a diversified portfolio of experiential retail destinations across China. Over six years, MAM sourced and structured over $US1 billion worth of investments, including arranging and refinancing debt and providing co-investment capital. Today, the portfolio’s properties receive more than 8.7 million visitors each year⁵.

These investments have seen MAM lead the development and renovation of retail projects across five Chinese cities. This has included the design and construction of a greenfield shopping centre which opened to the public in Xi’an in 2018, as well as the complex remodelling of an operating asset housed in an iconic heritage-listed building on Shanghai’s premier shopping strip.

With a focus on the environmental impact and sustainability of the portfolio, MAM is also supporting properties as they invest in energy efficiency measures. This includes replacing existing metal halide lamps in carparks with energy saving LED lighting, adding sensors to escalators to increase energy efficiency, and working closely with tenants to incentivise consumers to reduce plastics and coffee cups through tailored promotions in malls.

Mosaic Beijing

Adapting to changing markets

To ensure the portfolio’s retail offering remains relevant to millennial consumers, MAM (as part of a 50/50 Joint Venture with Pradera Limited) established Pradera Retail Asia – a specialist retail asset and property manager.

Overseeing approximately 5,800 tenant relationships, Pradera Retail Asia’s team of more than 130 professionals adapt and manage the tenant mix of retail properties to meet the evolving demands of consumers.

Mosaic Shanghai

This consumer-focused approached has enabled Pradera Retail Asia to offer access to new Chinese and international brands across retail, entertainment, food and beverage and cosmetics. Through the development of customer loyalty programs and club memberships, as well as social media-based advertising, key opinion leader marketing and customer tracking, Pradera Retail Asia is helping to effectively market these offerings in a competitive and changing retail sector in China.

Importantly, MAM’s asset managers remain focused on providing international service standards to those who visit its retail destinations. At this stage of development in Chinese cities, there are a significant number of well-located but poorly designed or managed retail properties. MAM is helping to repurpose value-add investments – ensuring that properties provide a relevant offering and safe environment for customers, clients and contractors.