Flood of new retail centres set to hit mainland China's second-tier cities
Many second-tier cities face an oversupply of shopping malls due to heavy urban planning
While signs of optimism are surfacing in Foshan's strained housing sector, the Guangdong city will face additional problems when planned new shopping malls flood the market.
Mainland media have reported that the number of shopping centres in the city of seven million will exceed that of Guangzhou by 2017. Foshan's economy in 2013 amounted to 701 billion yuan (HK$887 billion), against the provincial capital's 1.54 trillion yuan.
"There are about two million square metres of retail space in the city, but the new shopping malls in the pipeline will add an additional total area of 2.8 million square metres, 1.5 times the existing stock," an executive of a Hong Kong-based developer said. "They will be completed in the next three to four years."
The city already boasts major malls such as the newly opened Foshan Nanhai Wanda Plaza from Dalian Wanda Group, within the Qiandeng Lake area; Nanhai Vanke Plaza from China Vanke; and Sun Hung Kai Properties' Nanhai Plaza.
Meanwhile, Hong Kong-based Shui On Land is building a residential and commercial project, Foshan Lingnan Tiandi, along similar lines to Shui On's prominent Shanghai Xintiandi project. The project includes the redevelopment and preservation of buildings in the old town centre near the Ancestral Temple and the historic Donghua Lane.
"It is a typical example of the oversupply problem of retail spaces in non-tier-one cities," said Carlby Xie, head of China research at Colliers International.
Of the 14 first-tier and second-tier cities monitored by Colliers, Xie said almost all the second-tier cities faced oversupply.