I’ve just returned from China where I spoke at two conventions: the ICSC in Beijing and the annual major Mall China Conference, this year held in Shenzhen.
There is a definite mood swing occurring in the PRC shopping centre industry at the present time, and it has some great connotations for those in Australia wishing to get into that market, either in consulting roles, management arenas or even development.
Over the past 15 years there has been frenzied activity in the shopping centre industry in China; malls have been developed on a massive scale, both in sheer numbers and GLA.
In most cases, the developments have been ‘architect led’ – foreign architects (mostly American) have been invited to design luxury malls and they have done so with gusto. Architectural briefs have been about luxury, expensive embellishments and rich interiors resulting in myriad malls dripping with marble, travertine, chandeliers, glass roofs, gold-coloured shop surrounds, extravagant glass and brass balustrades, and the list goes on.
What’s been short is market research, with the industry being ‘market driven’ and developing centres in response to consumer demand. Consequently, the result is hundreds (estimates are that there are over 1,200 major shopping centres in excess of 80,000m2 across China) of spectacular malls, with lots of lookers and a distinct shortage of buyers inside them! Some estimates are that as many as 90% of them, judged by any international financial standards, are commercial failures!
But it’s not all bad; there are other agendas in force. The developers have secured land and, the locations of many malls are good. The country is still in development and growth mode, and time will heal many wounds.
It might be difficult to see a link with the PRC and our Cover Story, but there is one! It’s all about ‘opportunity’. As we said above, there are ‘malls’ all over China but, in the main, they’re downtown. There are around 170 cities in China with a population of over one million, and most of them don’t have suburban shopping centres. You could roll out Mini Gun and Little Gun centres by the thousand, and each would have a trade area in excess of 100,000!
It’s this fact that has caused the ‘mood swing’. Expertise in the shopping centre game is developing in China – as yet it’s nowhere near that of Australia, but it’s developing and already, people (and lots of them) are talking about ‘neighbourhood’ and ‘community’ centres. The link between market demand, rent, total project cost and ROI is being understood.
We live in South East Asia; our expertise in the shopping centre industry is valued. Consultants from Singapore, New York, LA and even Europe are arriving in China to sell their wares. The time is right for Australian involvement!
Meanwhile, on the subject of the Cover Story, Andrew Mellowes and his team have done a remarkable job on SCA Property Group. It was, as the story tells, only two and a half years ago that SCA launched. At the time, the critics looked at a portfolio dominated by Woolworths supermarkets, with long leases and low rentals, and commented that the spin-off was limited, lacking both potential and growth. Did they ever get proved wrong? If you’d invested in SCA then, you’d have made 70% on your money! It’s a great read with a great message – stick to the knitting, know your business, work hard and all there is, is upside!
At SCN the activity is feverish also! Next edition (November 2015) we go online! We are traditionalists; we’re hard copy people; SCN has its own identity and the print media is who and what we are. But times change, markets demand change and today’s world dictates that as well as publishing print, we must respond to the market and enter the electronic media world as well.
So as of next issue, all subscribers will not just get our magazine, you’ll be able to view it online too.
This of course opens up a whole new world; the Cover Story for example will contain links to fly throughs, more pictures, links to other related fields and myriad extensions. And it’s not just the Cover Story of course. Other articles will have their own links and the information at hand for our subscribers will expand enormously.
It also means we will be instant; we will publish information online on a daily basis; we will always be current as distinct from several times a year which we now are.
We’ve worked on this for almost a year, invested heavily in the initiative and we’re sure we’ve got it right! Details of online access will appear in our next issue. SCN