Retail in Asia

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US mall operator teams with local partners for Asia expansion

Eyeing the fast economic growth and rapidly evolving consumerism in Asia, Taubman Asia, a subsidiary of luxury US mall developer and operator Taubman Centres, is planning to drive its expansion in the region by forging joint ventures with local partners.

The company said on Tuesday that it has increased its ownership interest in the Hanam Union Square shopping centre, a joint venture it created with Korea’s leading luxury department store retailer Shinsegae Group.

Taubman Asia announced the partnership with Shinsegae Group last year in October under which it would invest USD330 million in Hanam Union Square for a 30 percent interest in the USD1.1 billion project.

In the new ownership structure unveiled on Tuesday, Taubman Asia has partnered with a major institution in Asia to acquire an additional 19 percent stake from Shinsegae Group. This new partnership now has a 49 percent ownership interest among which the new institutional partner owns 14.7 percent of the project while Taubman Asia owns 34.3 percent – a 4.3 percent increase compared with the previous 30 percent share.

Hanam Union Square shopping centre

"We’re delighted with our additional ownership in Hanam Union Square. Through our great partnership with Shinsegae Group, we’re building a landmark project that is on track to transform Hanam City into a premier shopping and entertainment destination," said René Tremblay, Taubman Asia President.

The Hanam Union Square shopping centre, a 4.5 million square feet mall in Hanam City, Gyeonggi Province, South Korea, will create more than 7,000 jobs and is scheduled to open in late 2016. It’s the third joint venture Taubman Asia has created with Asian partners.

In August 2012, Taubman Asia made its debut in Asia by teaming up with China’s largest department store operator Beijing Wangfujing Department Store to invest in and manage a shopping centre in the Chinese city of Xi’an. Five months later, the mall developer unveiled its second retail project in China – a multi-level shopping centre with 1,460,000 square feet in Zhengzhou, an economic hub of Central China. The two malls are expected to open next year.

CityOn.Xi’an

"We chose to partner with Korea’s Shinsegae Group and China’s Beijing Wangfujing Department Store Group because such a relationship allows us to leverage our proven track record and expertise in retailing, with their deeply insightful local expertise of the retail landscape," said Tremblay.

"Working alongside Wangfujing and Shinsegae means that our malls in China and South Korea will have high quality anchor tenants, and helps add instant value to our malls. By working with joint venture partners we immediately gain access to their local market knowledge, customer base and potential access to other projects in the pipeline. Both of them are also equipped with solid local market and operational capabilities," he explained.

"Our more than 60 years of experience in US and both parties’ long history makes a powerful combination. To that end, we are always open to partnering with the right partners," he added.

The luxury mall operator sees a lot of opportunity for growth in China and Korea and is committed to develop the two markets for the long term.

CityOn.Zhengzhou

"In Asia, we have a clear investment strategy and our commitment remains focused on the execution of our current portfolio of properties in China and South Korea. We feel it is more important to build a critical mass in these two markets, so are focusing on them for now," noted Tremblay.

When asked about the key factor in deciding where to open malls, Tremblay said it’s to seek locations characterized by an established retail market, growing market potential and improving demographic forecasts.

He took Xi’an and Zhengzhou, where Taubman’s CityOn malls will be located, for example. "Both of these cities are growing much faster than China generally. Xi’an and Zhengzhou GDP growth is 40-50 percent higher than the China national GDP for the last three years and both cities have population in excess of eight million."

"As part of our strategic entry into China and Korea, we have focused our attention where we can deliver unique, high quality and dominant assets appropriate to the market in its growth strategy," he concluded.