Chinese shopping malls will deliver more return on investment than offices and residential spaces, says property investment firm ARA Asset Management.

With 93 million more Chinese households to join the burgeoning middle class by 2015, mall investment is expected to grow, leading to malls surpassing offices and residential offices in terms of profits in the next two to five years.

“It is the middle-income group that is growing faster in terms of their wealth and buying power, which translates into very strong fundamental support for shopping malls,” said ARA Private Funds CEO Ng Beng Tiong.

However, profits are not guaranteed for shopping malls populated with luxury brands, says Tiong.

“We don’t go for malls that are full of Guccis and LVs (LVMH luxury goods), but the ones that serve the daily needs of a large catchment of residents and office workers,” he said.

He also said that China’s shopping mall count will increase by 40 per cent to 4000 by 2015.

The investment firm itself is planning to spend more in shopping malls after its real estate fund, the Asia Dragon Fund II, raised US$441 million last year.

It plans to expand footprints in key second-tier cities such as Chengdu, Hangzhou, Wuhan, Shenzhen, Chongqing and Guangzhou.

It says the retail markets in those cities will be vibrant, with shopping malls to account for 74 per cent by 2015.