A shopping mall in China.
As part of its ongoing expansion into Africa, JHI property services group is exploring opportunities to partner with international property developers when investing in new projects in the continent.
Recently JHI chief executive Marna van der Walt, together with other senior executives of the company, visited China on an educational tour and viewed 15 shopping complexes or malls in Hong Kong, Shanghai, Guangzhou, Dongguan and Beijing.
Van der Walt believes that in the medium to longer term, the east will have a major impact on the property landscape in Africa, so it is important to understand their property business models and view firsthand the property assets they have developed.
“Shopping malls in China tend to be from six to 12 storeys high, ranging in size from 120 000-300 000 m2 and averaging in value in the region of the equivalent of R1.6 billion. A good size mall is visited by at least 100 000 or more shoppers a day – and more on public holidays, which is extremely high when compared with South African malls,” she says.
Van der Walt says most shopping mall complexes include hotels and office blocks, with residential generally not included. Some malls are government-owned whereas those built by private owners or developers are on 50 year leasehold land - following which it appears that ownership of the land and mall would revert back to the Chinese government, although this will only become evident in future.
“As food anchors are not a priority, most shopping malls consist of mainly fashion, cosmetics and other novelties, and there is no trolley shopping as used in South African shopping centres. About 30-50 percent of the shops stock local brands and you don’t really see shops like Edgars and Stuttafords which stock a wide variety of brands - instead the various brands such as Benefit, Clinique, Jockey and so on tend to have their own individual stores,” says van der Walt.
After the company visit, Wayne Wright, JHI’s business development manager, attended a two-day Asia commercial real estate summit in Beijing where he addressed 150 stakeholders in the industry, including developers and fund managers from private equity property funds. His presentation provided an overview of the company and the South African and African property markets, as well as specific African projects requiring funding – with a view to soliciting interest from Asian developers or investors in partnering with JHI in Africa.
“It was extremely useful as it helped us gain a broad perspective of the Chinese property market and the drivers that influence their desire to invest outside China. While there we made contact with key property experts and representatives, including those from Singapore, Hong Kong and Australia, who are well connected with established Chinese companies already involved in projects in Africa. We are following up on these leads to further expose our service offerings through the continent to the Asian and international market,” he says.
Wright says with a population of about 1.3 billion and an economy that is growing at over 10 percent a year – although it remains to be seen if this is sustainable - China is focused on building its second and third tier cities outside the major centres.
“China enjoys huge inward investment from the rest of the world for property development, with inflows of approximately USD1 billion a week in foreign direct investment. The new trend emerging for developers is HOPSCA, (hotel, office, parking blocks, shopping centres, apartments), projects which are driven relative to the economic level of the specific city and area,” he says.