From Gandel to CFS Retail, now Asia

THE $5 billion CFS Retail Property Trust is getting ready to evolve from being an Aussie shopping centre owner with a planned Asia retail property fund, according to news reports.

According to Reuters, CFS Retail Property Trust is planning to establish a pan-Asian retail property fund, targeting the growth markets.

The planned trust will be set a new milestone for the trust, which was renamed about two years ago after the Gandel Group sold its part interests in Colonial First State Property Retail and Gandel Retail Management to Colonial First State Property, after entering into the Joint Venture in October 2002.

CFS Retail Property Trust’s assistant fund manager Justin Mills told Reuters that the fund will invest in China, Singapore, Hong Kong, India and Taiwan.

Expected to launch in the next 18 months, the fund’s main focus would be India, China and Hong Kong.

The planned fund will be a natural progression for the trust, after its manager Colonial First State Property Management teamed up with Jones Lang LaSalle earlier this month to start up, Sandalwood, a retail property management company in Asia.

Sandalwood is targeting the retail property markets of Singapore, Hong Kong, China, Macau, Taiwan, Indonesia and India.

The fund is looking to take advantage of robust growth and increasing wealth in the region.

“There’s greater growth in China and India, with Hong Kong being the more stable retail market,” Mills said.

Pramerica Real Estate Investors’ managing director of research Youguo Liang told Australian Property Journal China’s total retail sales between January and November 2007 totalled RMB8.02 trillion ($US1.1 trillion), a 16.4% increase over the same period last year.

“The most rapid rise in the past eight years, with sales of high-end goods such as luxury furniture and cosmetics increasing by 60% and 33% y-o-y, respectively. Retailers are generally upbeat about the outlook for 2008 and expansion plans are in the cards,” he added.

Meanwhile, Yougou said strong domestic consumption, tourist spending and an improved labor market boosted retail sales in Hong Kong. Total retail sales in the first 11 months of 2007 increased by 12.4% y-o-y, a much higher increase than the 6.9% growth in the preceding year.

Jewellery, watches and clocks, and valuable gifts continued to show the strongest growth in 2007.

“Despite the global financial market volatility, Hong Kong’s strong real estate and job markets are expected to sustain consumer confidence in the year ahead. This should bode well for the retailing industry, and the retail property sector will likely see rising rents in the new year,”

According to Reuters, there are more than 100 shopping malls in India and a further 300 are being developed. India‘s $350 billion retail industry is forecast to nearly double by 2015.

Yougou said Asia’s economic growth of 8.5% in 2007 was led by the robust growth in China and India.

“While growth is expected to moderate slightly in 2008 in anticipation of the slowdown of the global economy, Asia is still projected to see 8% growth – well above the average 6.5% annual growth rate from 1996 through 2006,” Yougou concluded.

Australian Property Journal