TH Real Estate deepens push in China designer outlet malls

TIAA Henderson Real Estate, one of the world's largest real estate investment managers with US$82 billion in assets under management, will continue to expand its designer outlet malls in China as the anti-graft campaign has not had a negative impact on their businesses.

TH Real Estate first opened an outlet in Tianjin in 2011 and then another near Shanghai Pudong International Airport in January. It will have one in Guangzhou in June this year, according to Asia-Pacific managing director Chris Reilly.

Through Silk Road Holdings, the company plans to develop more designer outlet malls with partners in China.

"We have identified four more sites to deliver the Florentia Village designer outlet schemes. There is a lot of progress there," said Reilly.

He said the business was not affected by the anti-corruption campaign because the outlets were selling off-season products at a discounted price. Outlet businesses were also stable in Europe and the United States.

"China is not the only market we have this programme of outlets. We have a large programme in Europe and Britain. We have invested in this specialist retail sector for more than 10 years, and these have been some of our most stable assets even during the [global financial crisis]," he said.

Reilly said the business in Tianjin saw double-digit growth in sales.

"We are very happy with the progress. The most likely next locations are Chengdu of Sichuan province and Wuhan, followed by Chongqing and Qingdao," he said.

"We do not just pick the locations randomly. It's very much about where the brands would like to be and the demographic profile of the cities."

TH Real Estate, which was launched last year, consists of US group TIAA-CREF's European real estate arm and London-based Henderson Global Investors' European and Asia-Pacific property businesses.

Reilly said the company had investments in Asia-Pacific worth US$1.5 billion, up from last year's US$550 million through organic growth and acquisitions. The bulk of its investments were in Australia.

The shareholders of Silk Road include the Italian Fingen Group of the Fratini family; Luxembourg-based China Outlet Mall, controlled by Jacopo Mazzei; Gaw Capital Partners from Hong Kong; the Sino-US Waitex affiliate; and a major US institutional investor.

Silk Road is advised by RDM Asia, the real estate development arm of Fingen in Asia, as an operating and development partner alongside TH Real Estate, which acts as an investment adviser.