Mall boom continues despite bubble fears

How many shopping malls does China need? If someone has come up with a sound answer for the retail needs of the world's most populous nation it may well have been drowned out by the construction noise from projects sweeping the mainland.

Property experts point to market saturation in some cities, but some mall operators justify their expansion plans by touting marketing strategies built on initiatives such as a better mix of tenants under their roofs.

"Apparently, shopping mall bubbles have emerged in some mainland cities, although some other places still have space for new malls," said Chu Hsiang-yun, senior director of national retail services at global property consulting firm CBRE.

More than half the malls to emerge from the 82 million square metres of projects under construction globally are in China. Of these, eight of the 10 biggest malls are also on the mainland, a CBRE report shows.

Separate research by global real estate services firm Jones Lang LaSalle shows that 150 malls will open in 20 major mainland cities this year, each with an average gross floor area of 80,000 square metres. That compares with 80 new malls opened last year. The area devoted to malls in Beijing, Shanghai, Guangzhou and Shenzhen will rise by 40 per cent by 2015, while space in 16 smaller cities may even double by then, it said.

"Every property developer wants to have access to the domestic market's rising middle class by getting into the retail business. Local governments are also encouraging mall construction as they want to increase tax revenue," said Steven McCord, associate research director at Jones Lang LaSalle, citing the factors behind the construction surge. The central government's measures to curb the residential property market since 2010 have served to strengthen this trend, boosting the appeal of retail and office markets to developers, he said.