Investors Stuck With China’s Shopping Malls Amid Modest First-Quarter Growth

Investors Stuck With China’s Shopping Malls Amid Modest First-Quarter Growth

Xu Wei

Date: Thu, 05/10/2018 - 19:11 / source:Yicai
Investors Stuck With China’s Shopping Malls Amid Modest First-Quarter Growth
Investors Stuck With China’s Shopping Malls Amid Modest First-Quarter Growth

(Yicai Global) May 10 -- China’s shopping mall composite index rose 0.3 percentage points to 67.5 in the first quarter, a more modest gain compared with last year despite some big investment deals.

Young and fashionable malls that offer families a one-stop shop were the main growth drivers, the commerce ministry said in a report on its website. Factors such as improving transport services and increasing resident population benefited regional retail properties, it added. The index fell 0.8 points from a year earlier.

The index surveys 100 shopping malls in 58 cities nationwide, measuring leasing activity, operating costs and development prospects, and is collected by the China Chain-Store & Franchise Association. A score above 50 indicates expansion, while one below 50 suggests contraction.

In China, the world's largest e-commerce market, brick-and-mortar stores are not out for the count as investors -- particularly the country’s internet giants -- make deals based on a belief that shoppers still want to visit brick-and-mortar stores despite an array of online options.

In January, Tencent Holdings Ltd. poured CNY34 billion (USD5.4 billion) into the nation’s largest mall operator Wanda Commercial Properties Co. after taking a 5 percent stake in grocer Yonghui Superstores Co. last December. A month before that Alibaba Group Holding Ltd., the country’s biggest online retailer, bought a 36 percent stake in department store chain operator Sun Art Retail Group Ltd.

The macro market and cost control indexes also implied business confidence, showing that most investors spent more on marketing and new technologies while projecting good profits, the report said.

The index of expectations for the next six months in the sector rose 1.2 percent in the quarter to 72.1, with 85 percent of entrepreneurs anticipating profits gains shortly. 

Editor: Emmi Laine

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Keywords: MODCOM, Shopping Mall Composite Index, Shopping Centers, China Ministry of Commerce