Buy­ing into China’s out­let mall sec­tor with Sasseur Reit

The Straits Times - - FRONT PAGE - Lorna Tan In­vest Edi­tor

Sasseur Reit is the first out­let mall real es­tate in­vest­ment trust (Reit) listed in Asia. It of­fers the op­portu- nity to in­vest in China’s fast-grow­ing out­let mall sec­tor. The Reit, which listed in March, has a port­fo­lio com­pris­ing four malls in Chongqing, Bis­han, Kun­ming and He­fei – with a net let­table area of 304,573.1 sq m (3.28 mil­lion sq ft). Q What dis­tin­guishes an out­let mall from a shop­ping mall? A Out­lets are not tra­di­tional re­tail and while Sasseur Reit is cat­e­gorised as a re­tail Reit, it is not a tra­di­tional re­tailer. Out­lets are for retailers to clear their out-of-sea­son mer­chan­dise at highly dis­counted prices through­out the year.

As com­pared with tra­di­tional re­tail, out­lets pro­vide dis­counted prices, good value for money, are fast-grow­ing and re­silient dur­ing mar­ket down­turns, and are not af­fected by e-com­merce.

Distin­guish­ing fea­tures of the Sasseur out­lets are their iconic cas­tle-like de­sign, with out­lets span­ning four to six storeys.

Q Who are the out­let mall shop­pers? A The out­let shop­ping malls aim to meet the needs and pref­er­ences of China’s grow­ing mid­dle-class pop­u­la­tion for quality branded prod­ucts and lifestyle ac­tiv­i­ties.

The out­lets are usu­ally lo­cated 30 min­utes to an hour from down­town ar­eas.

Chongqing Out­lets has distin­guished it­self through an ex­pe­ri­en­tial shop­ping con­cept tar­get­ing the mid­dle- and up­per-class con­sumers with higher dis­pos­able in­comes, and is one of the malls in Chongqing with the strong­est in­ter­na­tional brands of­fer­ing.

The Bis­han, He­fei and Kun­ming Out­lets cater to mid­dle-class con­sumers by of­fer­ing a wide range of en­ter­tain­ment choices as well as lux­ury brand stores.

Q What can shop­pers find in the out­let malls? A The four malls have a di­ver­si­fied ten­ant mix that spans chil­dren’s amuse­ment parks to big-name in­ter­na­tional brands.

As of June this year, fash­ion out­lets took up 34 per cent of the net let­table ar­eas (NLA) of the malls, with in­ter­na­tional brands taking up 16 per cent of the NLA and sports taking up 8 per cent.

In terms of pro­por­tion­ate rev­enue, th­ese three gen­res con­trib­uted more than their 58 per cent NLA, by mak­ing up 80 per cent to the port­fo­lio’s gross rev­enue. Food and bev­er­age is also an im­por­tant part of the mall, taking up 7 per cent of the NLA.

Q Which pop­u­lar brand names can shop­pers find? A Sasseur Reit has a well-di­ver­si­fied mix of ten­ants. In terms of lux­ury prod­ucts, core brands in­clude Gucci, Coach, Ar­mani, Michael Kors, Ermenegildo Zegna, Sal­va­tore Fer­rag­amo, Hugo Boss and Max Mara. Core mid-mar­ket brands in­clude Nike, Adi­das, New Bal­ance, Fila and Calvin Klein.

Q How are the out­let malls em­brac­ing the de­mand for more lifestyle-like malls? A Sasseur (Bis­han) Out­lets was de­signed to be a one-stop shop­ping des­ti­na­tion in the Bis­han and West Chongqing ar­eas, com­bin­ing re­tail shop­ping with en­ter­tain­ment, food, ed­u­ca­tion and leisure.

As part of the “Su­per Out­let” busi­ness model, Sasseur (Bis­han) Out­lets fea­tures a “Su­per Chil­dren’s Cen­tre”, which has re­tail stores of­fer­ing a se­lec­tion of in­fant and chil­dren’s cloth­ing la­bels, an early child­hood ed­u­ca­tion cen­tre, an en­rich­ment cen­tre, a chil­dren’s play­ground, a chil­dren’s pho­tog­ra­phy cen­tre and a chil­dren’s the­atre.

In ad­di­tion, the “Su­per Sports Hall” houses the out­let stores of sports brands such as Nike, Adi­das and Le Coq Spor­tif and also fea­tures a fit­ness cen­tre.

Sasseur (He­fei) Out­lets fea­tures one of the largest cinemas in east China and the first five-star cin­ema in He­fei un­der the UME cin­ema chain. Sasseur (Kun­ming) Out­lets of­fers a wide ar­ray of re­tail op­tions, in­clud­ing out­let mall shop­ping, health­care ser­vices, en­ter­tain­ment and cul­tural fa­cil­i­ties. The ameni­ties pro­vide cus­tomers with a com­pre­hen­sive lifestyle and en­ter­tain­ment ex­pe­ri­ence in­tended to pro­mote re­tail spend­ing and en­hance cus­tomer loy­alty.

Q When did you record your last one-day shop­ping record? A Re­cently, we an­nounced that Chongqing Out­lets – which is the largest out­let mall in the Reit’s ini­tial port­fo­lio – achieved to­tal sales of more than 325 mil­lion yuan (S$64.5 mil­lion) dur­ing 16 days of the an­niver­sary sales cel­e­bra­tions.

First-day sales alone were more than 130 mil­lion yuan, up from last year’s sales on the same day of about 90 mil­lion yuan, hit­ting a new one-day sales record.

On a cu­mu­la­tive ba­sis, aver­age daily sales were up by about 27.6 per cent com­pared with the same pe­riod last year. This demon­strated con­tin­u­ing strong sales growth of Chongqing Out­lets, de­spite it be­ing a rel­a­tively ma­ture out­let mall.

Q The rel­a­tively newer He­fei and Kun­ming Out­lets also re­cently con­cluded a sec­ond an­niver­sary sales sea­son. How did sales fare com­pared with the first-year an­niver­sary? A He­fei and Kun­ming Out­lets held their sec­ond an­niver­sary sale cel­e­bra­tion from Sept 8 to 24. Both out­lets, which were opened in 2016, are the younger out­lets in the Reit’s ini­tial port­fo­lio.

He­fei Out­lets has 283 stores with about 450 brands, and Kun­ming Out­lets has 209 stores with around 350 brands.

To­tal sales for the an­niver­sary sale cel­e­bra­tions ex­ceeded 160 mil­lion yuan, with aver­age daily sales up about 50 per cent in Kun­ming Out­lets and about 27 per cent in He­fei Out­lets, from the same event last year.

Oc­cu­pancy rate in He­fei Out­lets was 95.2 per cent while it was 95.4 per cent in Kun­ming Out­lets, as at June 30.

Ac­cord­ing to the In­de­pen­dent Mar­ket Re­search re­port, He­fei Out­lets is well lo­cated be­side Wangzui Lake, which has been se­lected for the es­tab­lish­ment of a new cen­tral busi­ness district fo­cused on key in­dus­tries such as busi­ness, sci­en­tific re­search, com­merce and tourism.

Kun­ming Out­lets is in Taip­ing New City near Kun­ming City. It is a new res­i­den­tial district which is en­joy­ing rapid growth and strongly sup­ported by the re­gional govern­ment in its in­dus­trial de­vel­op­ment plans for the Kun­ming area. Q You men­tioned ear­lier out­let malls are fast grow­ing. Can it con­tinue? A Out­let malls are one of the fastest grow­ing re­tail seg­ments in the world, out­pac­ing that of e-com­merce and tra­di­tional re­tail.

This is es­pe­cially so in China, where out­let sales are pro­jected to grow strongly by an in­de­pen­dent mar­ket re­search re­port by China In­sights Con­sul­tancy.

The re­port pro­jects out­let sales growth to ex­pand at 25 per cent an­nu­ally for the next five years to ap­prox­i­mately 640 bil­lion yuan by 2030, mak­ing it the largest in the world ahead of the United States.

As the first out­let mall Reit listed in Asia and spon­sored by the lead­ing and largest out­let mall op­er­a­tor in China, Sasseur Reit of­fers in­vestors an op­por­tu­nity to ben­e­fit from the tremen­dous growth in this re­tail seg­ment.

Q How many peo­ple does the group cur­rently em­ploy? A Sasseur Group em­ploys 80,000 peo­ple in China, creat­ing sig­nif­i­cant eco­nomic and so­cial value in every city that Sasseur Out­lets op­er­ate in.

The group’s pres­ence in Chongqing is strate­gic i n that Chongqing is the only mu­nic­i­pal­ity in west China, and the key city in the China western re­gion as well as be­ing lo­cated at the junc­tion of the One Belt One Road ini­tia­tive and the Yangtze River eco­nomic belt.

Q Other than be­ing the first out­let mall Reit listed in Asia, were there other mo­ti­va­tions or sup­port­ive fac­tors for list­ing in Sin­ga­pore? A The list­ing of Sasseur Reit was unique as it was also recog­nised as the first demon­stra­tion project (fi­nan­cial ser­vices) of the China-Sin­ga­pore (Chongqing) Con­nec­tiv­ity Ini­tia­tive.

Be­ing the third in­ter-gov­ern­men­tal co­op­er­a­tion project be­tween Sin­ga­pore and China fol­low­ing the Suzhou In­dus­trial Park and Tian­jin Eco-City pro­jects, this is highly sig­nif­i­cant for Sasseur Group and has el­e­vated the group’s de­vel­op­ments to new heights.

ST PHOTO: TIMOTHY DAVID

Mr Xu Rong­can, chair­man of Sasseur As­set Man­age­ment, man­ager of Sasseur Reit, says out­let malls are one of the fastest grow­ing re­tail seg­ments in the world, out­pac­ing that of e-com­merce and tra­di­tional re­tail. This is es­pe­cially so in China, where out­let sales are pro­jected to grow strongly by an in­de­pen­dent mar­ket re­search re­port by China In­sights Con­sul­tancy.

PHO­TOS: SASSEUR REIT, SASSEUR GROUP

Sasseur Reit’s port­fo­lio in­cludes out­let malls in (above from left) Chongqing, Kun­ming and He­fei, all in China.

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