Stand­ing out from the crowd

De­spite an over­sat­u­rated com­mer­cial prop­erty mar­ket, Citic Cap­i­tal is con­fi­dent that it can at­tract the crowds with its new glitzy shop­ping mall that it says will be ac­ces­si­ble and af­ford­able to all

China Daily (Canada) - - SHANGHAI - By WANG YING in Shang­hai

wang_y­ing@chi­nadaily.com.cn

He may have lived over­seas for decades, but Shang­hai still holds a spe­cial place in Stan­ley Ching’s heart. Born in this city, Ching re­gards the unique Shang­hainese di­alect as his mother tongue and those de­li­cious fla­vored dumplings sold at the snack bar lo­cated near his of­fice still ranks among his fa­vorites.

The se­nior man­ag­ing di­rec­tor of Hong Kong-based Citic Cap­i­tal’s real es­tate busi­ness, Ching is com­ing full cir­cle back to his roots, lead­ing his team on their first com­mer­cial pro­ject in Shang­hai.

Shang­hai 189Lane, a new $250 mil­lion shop­ping mall, will oc­cupy an area of 6,157 square me­ters and is lo­cated at the in­ter­sec­tion of Chang­shou and Xikang roads in Pu­tuo district.

For the first time, Citic Cap­i­tal, an al­ter­na­tive in­vest­ment man­age­ment and ad­vi­sory com­pany un­der Citic Group, will be build­ing a shop­ping mall in Shang­hai on their own in­stead of en­gag­ing a de­vel­oper.

“Com­mer­cial fa­cil­i­ties that used to be stylish a decade ago are no longer ad­e­quate for mod­ern needs, such as places for en­ter­tain­ment and ex­er­cise. The 189Lane pro­ject will mix tra­di­tional Shang­hai cul­ture with mod­ern ex­pe­ri­ences,” said the 49-year-old.

“We are try­ing to make the de­vel­op­ment the city’s liv­ing room, and the high qual­ity ser­vice and prod­ucts we pro­vide will be af­ford­able for daily con­sump­tion at the same time. To achieve this goal, we need to make ev­ery de­ci­sion prop­erly and care­fully, and we can­not sim­ply out­source the pro­ject to a de­vel­oper.”

Citic Cap­i­tal’s de­ci­sion to un­der­take the build­ing of their own mall in Shang­hai stems from the suc­cess of an­other sim­i­lar de­vel­op­ment in Hu­nan prov­ince where Ching’s team turned an un­fin­ished build­ing into the most pop­u­lar and vis­ited shop­ping mall in the pro­vin­cial cap­i­tal of Chang­sha within three years.

The team started to ex­pand fol­low­ing this suc­cess­ful pro­ject and Citic Cap­i­tal now op­er­ates a team of more than 20 peo­ple who fo­cus on the com­mer­cial prop­erty sec­tor. In ad­di­tion to the Chang­sha and Shang­hai de­vel­op­ments, Citic Cap­i­tal also has on-go­ing projects in Bei­jing and He­fei of An­hui prov­ince.

For the last decade, the com­pany has placed much fo­cus on the Chi­nese main­land by in­vest­ing in more than 4 mil­lion square me­ters of prop­er­ties, and its real es­tate team has made com­mer­cial prop­er­ties their main in­vest­ment pri­or­ity.

“Half of our in­vest­ment cap­i­tal goes to build­ing shop­ping malls, with the rest flow­ing to res­i­den­tial projects and of­fices,” said Ching, who added that Citic Cap­i­tal has poured a to­tal of $1.3 bil­lion into the do­mes­tic prop­erty mar­ket as part of ef­forts to grad­u­ally es­tab­lish as­sets port­fo­lio.

Citic Cap­i­tal’s am­bi­tion in the real es­tate and com­mer­cial prop­er­ties scene in China comes at a time when the econ­omy is slow­ing. In­ven­to­ries of shop­ping mall space are ris­ing, too.

In 2014, half of the 11.4 mil­lion square me­ters of new­ly­opened shop­ping cen­ters world­wide were lo­cated in China, and the coun­try also ac­counted for more than 60 per­cent of the shop­ping projects un­der­way glob­ally, ac­cord­ing to a re­port from real es­tate

its own con­sul­tancy CBRE.

The sur­vey also stated that nine out of the ten most ac­tive mar­kets are in China, and Shang­hai ranks the top in terms of retail space un­der con­struc­tion (4.1 mil­lion sq m), fol­lowed by Shen­zhen (3.4 mil­lion sq m), Chengdu (3 mil­lion sq m), Chongqing (2.6 mil­lion sq m) and Guangzhou (2 mil­lion sq m).

Mean­while, the to­tal num­ber of new malls in China was ex­pected to reach 4,000 by the end of 2015, surg­ing 40 per­cent from 2011, ac­cord­ing to an­other re­port from

Stan­ley Ching, the China Chain Store As­so­ci­a­tion and pro­fes­sional ser­vices firm Deloitte. De­spite the over­sup­ply in the mar­ket, Ching be­lieves there are still op­por­tu­ni­ties be­cause “the ac­tual sup­ply and de­mand sit­u­a­tion will be dif­fer­ent from area to area”.

He also views the slow­down in the com­mer­cial prop­erty scene as a fa­vor­able sit­u­a­tion that could pro­vide his team with op­por­tu­ni­ties.

“The land would be priced at a more rea­son­able level while the mar­ket would be more in­vestor-ori­ented. Over­ca­pac­ity is not new in all in­dus­tries. The play­ers just need to be selec­tive when mak­ing de­ci­sions,” said Ching.

Ding Zuyu, ex­ec­u­tive pres­i­dent of E-House ( China)

re­port, China’s an­nual retail vol­ume is ex­pected to grow at an av­er­age of 8.7 per­cent over two years, and the coun­try is set to be­come the world’s largest retail mar­ket by 2018.

“The retail sec­tor in the next five to 10 years will con­tinue to grow promis­ingly. Al­though e-com­merce has been tak­ing a larger share of the pie in retail, there will still be a con­sid­er­able de­mand for phys­i­cal store re­tail­ing,” added Ching.

Ching also be­lieves that the phys­i­cal shop­ping ex­pe­ri­ence can­not be re­placed by its on­line al­ter­na­tive, and that e-com­merce brands will need to take their busi­ness off­line if they want to de­velop past a cer­tain stage.

“Take the Ap­ple store for ex­am­ple. They pro­vide a place for peo­ple to try all of Ap­ple’s of­fer­ings, and with the ex­pan­sion of its prod­ucts, we have seen more and more Ap­ple stores in our cities,” he said.

Ching added that while brick and mor­tar stores ful­fill the need for hu­mans to so­cial­ize, and will thus never go ex­tinct, shop­ping mall oper­a­tors nev­er­the­less need to pay more at­ten­tion to the de­sign and hard­ware el­e­ments in or­der to make their fa­cil­i­ties more at­trac­tive to con­sumers.

PRO­VIDED TO CHINA DAILY

Stan­ley Ching, se­nior man­ag­ing di­rec­tor of Citic Cap­i­tal’s real es­tate busi­ness, be­lieves the retail busi­ness will con­tinue to grow in the next sev­eral years in the city.

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