Designer outlet malls, which enable brands to sell stock directly to the public through factory outlets, have continued to see strong growth in sales throughout Asia-Pacific, bucking the downturn that has affected other brick and mortar retailers during the e-commerce boom. The gains have been particularly noticeable in China, where a building boom has led to a doubling of outlet malls in the last two years. China has 110 outlet malls nationwide, or about 45 per cent of the 244 such malls across Asia-Pacific. Real estate investment funds remain upbeat on the outlook for these factory outlets, saying the model retains its appeal to consumers even as online retailing continues to cannibalise other parts of the retailing world. Consumers are attracted by pricing discounts offered through the factory outlets, as well as the architectural design that help create spaces that function as “weekend leisure destinations”, according to Harry Tan, head of research for Asia-Pacific at Nuveen Real Estate. “Designer outlet malls are inherently experiential centres as the unique architecture, village style concept combine to create an immersive effect for shoppers,” Tan said. “Visitors want something unique, aesthetically pleasing, visually stimulating and the outlet mall caters in this regard.” Nuveen Real Estate has seven outlet malls under the brand of Florentia Village in Greater China, including one in Kwai Chung in Hong Kong. Outlet malls have also been shielded from the retail apocalypse affecting other brick and mortar retailers because they act as social gathering points. “Convenient assets anchored with food retail should be comparatively shielded from the online competition and attract frequent visitation, hence outperforming,” according to Nuveen Real Estate’s third-quarter outlook for property markets in Asia-Pacific cities. Hong Kong’s mall landlords mix gaming, golf and fashion with retailing as they search for oomph to hang on to return shoppers Tan said his company is looking to bring the outlet mall concept to more locations in China, but did not say exactly where. “We definitely expect more capital to pour into the sector from both developers and private equity funds. Over the years [we] have seen greater interest from institutional investors as they get clued in on the benefits of adding outlet malls into their portfolio,” said Tan. “In China, where the environment has seen high-street sales slow over the recent years, our outlet malls continue to go from strength to strength with Florentia Village Jingjin and Florentia Village Shanghai growing at a decent rate since opening,” Tan said. The London-based firm, which has US$129 billion of assets under management, has been aggressive in building up its portfolio of designer outlet malls in China, opening locations in Jingjin in 2011, Shanghai in 2015, and Hong Kong in 2017. Shui On revamps Xintiandi Plaza as it looks to become the go-to destination for female shoppers in Shanghai Lawrence Wan, senior director, advisory and transaction services for retail at CBRE Hong Kong, said the discount price offerings at outlet malls were a big part of their success story. “Consumer spending is somewhat more price sensitive, so this does expand the market share of designer outlet malls. While designer outlet malls were once conceptualised as only stocking XXS or XXL, or out-of-season stock, this is no longer the case as some brands even offer ‘outlet only’ lines,” Wan said. For the most part, designer outlet malls in China have been relatively immune to economic and property market down cycles. Bailian Group, one of China’s largest retailers, reported sales at its Chinese outlet malls grew by 10.8 per cent on year in 2018, while sales at its regular shopping malls declined 1 per cent over the same period. Euromonitor forecast store-based retailing will amount to US$4.64 billion in Asia-Pacific in 2020, reflecting a rise of 2.2 per cent from a projected US$4.54 billion this year. Internet-based sales across the region will rise to US$1.08 billion by 2020, reflecting a 13.8 per cent rise from an expected US$949 million this year.