Chinese billionaire Wang Jianlin’s Dalian Wanda to open renovated Beijing mall under ‘asset-light’ model
- Wukesong Wanda Plaza, a 300,000-square-metre mall in Beijing’s northwestern Haidian district, will open some time in June
- Fitch Ratings expects China’s retail sales to pick up next year on the back of the relaxed Covid-19 approach and policy measures to revive domestic consumption
Wanda has taken over the 300,000-square-metre Wukesong Shopping Center in the northwestern Haidian district and renamed it as Beijing Wukesong Wanda Plaza. It is Wanda’s first mall in the area, and one of the biggest in China’s capital.
The mall will definitely open some time in June, a source from Wanda who declined to be named confirmed on Monday, as he was not authorised to speak to the media. The company did not reply to a request for additional comment.
In April, Wanda’s subsidiary Beijing Liangma Wanda Plaza Commercial Management signed an agreement with developer Blue Harbor to take over the operations of two malls in Beijing – Wukesong and Solana.
Fitch Ratings expects China’s relaxed Covid-19 approach and steps to revive domestic consumption to rejuvenate retail sales in 2023. “Nevertheless, we expect the pace of retail sales recovery to remain uncertain, subject to the extent of pandemic-related productivity disruptions and improvements in sentiment and employment,” Fitch said on Thursday.
The Wukesong mall, which is undergoing renovation, has lost most of its tenants since the Covid-19 pandemic struck in 2020. Wanda plans to revamp the seven-storey mall with a theme for each floor, a garden, a 64-metre-long escalator, and two giant screens to lure consumers back and restore the mall to its past glory.
Wanda took over the operations of the 150,000 sq m Solana Blue Harbor mall in Beijing’s eastern Chaoyang district in May.
Zhuhai Wanda Commercial Management Group, the property management arm of Dalian Wanda, operates malls owned by third parties as part of its “asset-light” strategy – without making any investments.
Wanda has been expanding Zhuhai Wanda’s business this year while pushing for an initial public offering (IPO) in Hong Kong this year.
Zhuhai Wanda claims to be the largest commercial operation service provider in China with a primary focus on malls, according to its prospectus. It filed for an IPO in Hong Kong in October, its third prospectus after two applications lapsed earlier.
The company said that most property developers do not have enough experience in operating commercial properties, which gives opportunities to big players like Wanda to provide services to developers to help operate and manage their retail commercial properties.
By adopting this asset-light strategy since 2015, Wanda said that it can avoid investing capital in acquiring land or commercial property development.
“Such models can reduce the financial burdens of commercial operation service providers in holding or acquiring assets, improve their capital operational efficiency, and optimise resource allocation, which may bring higher profit margins and return on capital,” it said in the prospectus.
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The company said that as of June 2022, it managed 140 malls under this model, accounting for 33 per cent of all the malls under its management. They generated 4.03 billion yuan (US$578 million) in revenue, accounting for 32.6 per cent of Wanda’s gross profit margin in the first half of 2022.
The company added that it has another 175 projects owned by third parties with a floor area of 20.6 million sq m in its pipeline.
Zhuhai Wanda currently manages 425 malls across China, according to its prospectus.
Chinese regulators placed parent Dalian Wanda on a watch list in 2017 along with Anbang Group, Fosun Group and HNA Group. These privately controlled Chinese conglomerates had accumulated some of the world’s largest debts after snapping up overseas trophy assets, often at premium prices, and were facing significant debt maturities.
Over the years it has gradually disposed of overseas assets to trim its debt pile. These included US cinema chain AMC Entertainment, Spanish football club Atletico de Madrid, and various property projects in Spain, the UK and the US.
