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