Investors and developers are looking to China's second-tier cities for retail projects catered to large domestic inland populations.
Unlike in prime cities, mall construction in China's second-tier cities is showing no signs of slowing down. According to data from CBRE, the past 10 years have seen 20 million sq m of shopping malls and retail centres built in cities throughout China. The research said that another 15 million sq m is currently under construction.
However, it is not the top-tier cities like Shanghai and Beijing that are seeing the action. Instead, China's second-tier cities are the markets widely acknowledged by industry insiders as the hotbeds of domestic consumption.
Unlike their more well-heeled counterparts, residents of inland second-tier cities are less likely to jet off elsewhere to do their shopping, and are instead much more likely to throng shopping centres near them.
Recognising the massive potential of such populations, developers have responded with a slew of retail mega projects packed with everything from grocery to IMAX theatres. This has raised China's profile as the new retail capital of the world.
CBRE said that out of 180 major urban centres worldwide, Shenyang, Wuhan and Chengdu ranked in the top 10 cities with the most shopping space.
President of the China Shopping Centre Development Association, Guo Zengli said, "China had 2,812 shopping centres over 10,000 sq m in 41 cities we covered at the end of 2011. And the compound growth rate for the amount of shopping space in China is 25% over the past 10 years."
"Overseas commercial developers and retailers are doing better than local ones, who are mostly real estate developers that are being limited by the governmentâ€™s clampdown on the countryâ€™s housing market," he added.
In other news, a joint-venture between Metro Holdings and Hong Kong-listed Chinese property developer Top Spring International have secured a mixed-use development site in the new Nanchang CBD in Jiangxi.
Metro and Top Spring entered a winning bid of RM 1.92 billion yuan for the leasehold site, which spans 270,000 sq m in Honggutan New District. The gross floor area of the site is up to 795,000 sq m.