JHI mulls China malls

"I believe in the medium to longer term, the east will have a major impact on the property landscape in Africa. As a result, we felt the need to understand their property business models and view firsthand the property assets they have developed," says van der Walt.

"Shopping malls in China tend to be from six to 12 storeys high, ranging in size from 120 000-300 000 square metres 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 per day - and more on public holidays, which is extremely high when compared with South African malls.

Van der Walt says most shopping mall complexes include hotel and office blocks but residential is generally not included. Some malls are government-owned while those built by private owners or developers are located on 50-year leasehold land - following which it appears that ownership of the land and mall would revert to the Chinese government, although this will only become evident in future.

"As food anchors are not a priority, most shopping malls comprise mainly fashion, cosmetics and other novelties, and there is no trolley shopping as used in South African shopping centres. Approximately 30-50% of the shops stock local brands and you don't really see shops such as Edgars and Stuttafords which stock a wide variety of brands - instead the various brands such as Benefit, Clinique, Jockey etc tend to have their own individual stores."

Real estate summit

Further to the above visit, Wayne Wright, JHI's business development manager, attended a two-day Asia Commercial Real Estate Summit in Beijing where he addressed some 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 into Africa.

"It was extremely useful in that it helped gain a broad perspective of the Chinese property market and the drivers which influence their appetite to invest outside of 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 currently 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 approximately 1.3 billion and an economy, which is currently enjoying growth of over 10% per annum - although it remains to be seen if this is sustainable - China is currently 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 US$1 billion (about R7.3 billion) per week in foreign direct investment. The new trend emerging for developers is 'HOPSCA', (ie hotel, office, parking blocks, shopping centres, apartments), projects which are driven relative to the economic level of the specific city and area," he adds.

As part of its ongoing expansion into Africa, JHI property services group is currently exploring opportunities to partner with international property developers regarding investment in new projects in the continent.