At our recent MAPIC and MIPIM Asia conferences in Cannes and Hong Kong, we saw a group of top property experts share their wealth of knowledge with thousands of attendees.
A key area for both retail real estate and property development in general is China. The country has seen sky-rocketing real estate growth while Europe struggles through a new wave of economic difficulties.
MAPIC 2011 saw key industry leaders gather for a panel discussion entitled Expanding footprint of emerging economies. Of particular interest was the Chinese retail real estate market, which has seen stunning growth in the past decade.
Panelist Beng Chee Lim, CEO of CapitalMalls in Singapore, said that although China currently has 2,000 shopping centres, market research has shown that there is room and demand for an additional 10,000 shopping centres across the country.
Lim told attendees that in the last ten years alone, Chinese household disposable incomes have increased by 180%, creating double digit growth in retail sales.
“This is not just in first-tier cities like Shanghai. It’s very broad based. We’re looking at $1.3 trillion in retail sales in the first nine months of 2011 alone”, she said.
According to Lim, second-tier cities are outpacing first-tier cities in terms of retail growth, and Chinese developers are hungry for new projects. But a critical mistake many companies make when entering the Chinese market is failing to understand the Chinese consumer.
“How much do they really understand Chinese consumers? Do they have the true insights? What is the Chinese consumer?” she asked.
While Lim is bilingual, she stressed that she is not bi-cultural, and that CapitalMalls needed to find an experienced and trustworthy partner to enter the Chinese market.
“What’s happening in first- and second-tier cities is different, coastal versus mainland is different. China is huge and diverse”, she said.
The Chinese consumer was discussed at length during MIPIM Asia 2011. In Hong Kong, experts from retail giant Cushman & Wakefield, Treasury China Trust, Godiva Chocolatier and Costa Coffee hosted a conference explaining how to reach customers in China.
In a special conference titled “Globalisation of retail brands in and out of China”, our expert panel discussed how Chinese customers are becoming increasingly picky about where they shop.
It’s critical for potential investors to know the market before they leap in. In the case of Costa, planners had to tailor their stores to specific preferences, such as avoiding square or rectangular stores if possible and favouring unusual shapes to develop identity and encourage people inside.
“‘Emotions are becoming much more important in China”, said Costa general manager Bernard Chiew, arguing that creating emotional attachment to a brand is a surefire way to attract and retain new shoppers in China.
Treasury China Trust CEO Richard David agreed, and said China was moving away from the department store model to a westernised international style shopping mall model. According to him, stores are concentrating on building tall on smaller footprints, rather than horizontally as in Europe.