Citic Capital eyes pair of retail developments

State-controlled asset management firm Citic Capital Holdings has cast a vote of confidence in the mainland's retail property sector with plans to buy two projects.

"We plan to close the two deals by the end of this year, both more than 100,000 sqmetres in gross floor area," said Stanley Ching Hiu-yuen, senior managing director of real estate.

Ching did not reveal the investment amount but said one was in a first-tier city and the other in a second-tier city.

Founded in 2002, Citic Capital counts among its shareholders China Investment Corp, the country's sovereign wealth fund, and Citic Group, the largest conglomerate on the mainland, through subsidiaries Citic International Financial Holdings and Citic Pacific.

Citic Capital's real estate business, established in 2005, focuses on the mainland market and has launched four managed funds and one co-investment platform. The total investment amounts to between US$3 billion and US$4 billion.

Last year, the company closed a US$683 million fundraising campaign for the fourth fund, which focuses on retail properties on the mainland. It has already invested part of the new fund in three projects, including a shopping mall in Changsha in Hunan province, another in Hefei, Anhui province, and a third in Shanghai.

"In general, China's retail property market faces an oversupply. But it's winner take all," said Ching. Most of the oversupply, he said, was in cities without effective urban planning, where government officials rushed to build large shopping malls or tall office buildings regardless of demand and supply.

Ching said there had been a growing number of visitors to the firm's shopping mall in Changsha, which had attracted international clothing brands like Gap and Uniqlo.

The rapid development of Changsha's infrastructure had been drawing shoppers from smaller cities nearby, he said.

Ching is confident about the mainland's retail property market as the country is still experiencing rapid urbanisation, the key driver of growth in domestic consumption.

In this week's C-Suite interview, Ching shares his view on why the mainland's property market will not collapse, development trends and the company's investment strategy