Shopping malls have been part of cityscape space in the West for at least 50 years but it is only in the past 10 years that the Chinese have had access to this type of enclosed shopping facility.
Spurred by the entry of such luxury good retailers as Louis Vuitton and Burberry, there are now 14 major Chinese cities with western-style shopping malls, says Neville Moss, head of retail research for Europe, the Middle East and Africa of property consultancy CBRE.
The research firm Property Market Analysis has produced figures showing a downturn in Western European mall development: 14 million sqm at the end of March this year compared with 17 million sqm in 2007.
Land Securities’ 93,000 sqm Trinity Leeds Shopping Centre will be the only larger British mall scheduled for opening in the space of two years. The spirit for large-scale mall development is tame also in France, the Netherlands and Sweden.
Shopping malls now cover a total space of about 20 million sqm in China, according to CBRE. The total is 55 million sqm in Western Europe. But with the current rate of development growth, China is expected to overtake Europe in five to 10 years according to Moss.
Hong Kong-based Sun Hung Kai Properties Swire Properties and Singapore-based CapitaMalls Asia are at the helm of mall space development in China. The former have completed the building of malls in Chengdu, Sichuan Province while the latter has allocated 2.3 billion yuan (US$361 million) for the construction of its ninth mall in Beijing.
The drive to build malls may have been driven by a middle class taste for new luxuries yet it is also the product of the government’s intervention in housing space development to put the lid on an overheated market. But there is a fear that the shopping center rush will create another bubble. Builders responded to the curtailment of housing development by turning to shopping mall development.
In the core of major cities there is now competition among retailers for leases in the more posh locations. Malls in city peripheries, on the other hand, suffer from over-supply.
One of the world’s largest malls remains almost empty, even seven years after its completion. This is the 660,000 sqm New South China Mall located in the city of Dongguan, near Guangdong.
Moss is more optimistic about the development in emerging, suburban parts of second-tier or third-tier cities.
