Increasing its presence in Asia’s fastest-growing economy, CapitaLand Ltd., Southeast Asia’s largest property firm by assets, would pay S$360 million (US$220 million) for two shopping malls in Beijing that it would fold into a proposed China retail property fund, the Singapore-based property company said.

The deal with Beijing Hualian Group comes just two weeks after CapitaLand signed an agreement to buy 51 percent stakes in six malls across China that will have U.S. retail giant Wal-Mart Stores Inc. as anchor tenant.

“With these acquisitions, and with more acquisitions in the pipeline, we will establish and enlarge CapitaLand’s retail footprint in China. It will also expedite our plans to establish a China retail property fund with listing potential,” Liew Mun Leong, president and chief executive of CapitaLand, said.

With the latest buys, the total asset value of CapitaLand’s China retail portfolio amounts to more than S$729 million and Liew said that CapitaLand was targeting to launch its China retail fund in about two years.

CapitaLand’s latest agreement involves the purchase of two shopping malls in Beijing’s Chaoyang District, a suburban area that also houses many high-tech companies.

The two malls have a gross floor area of 131,400 square meters and will provide CapitaLand with a guaranteed minimum net property, or rental, yield of 8 percent. The 61 percent Singapore government-controlled developer hopes to generate a higher return of over 9 percent.

Beijing Hualian, one of China’s largest retailers, will be the anchor tenant at these malls.

Under a pact signed Tuesday, Beijing Hualian also granted CapitaLand the first right to buy six other malls the Singapore company has identified as possible acquisitions, including two in Beijing, that will be completed in 2005 and 2006.

The six malls in the pipeline would have a total gross floor area of over 400,000 square meters and were valued at around S$700 million, said CapitaLand Retail Ltd. chief executive Pua Seck Guan.

“Beijing is an exciting location for retail... the retail scene there can take a lot of improvement compared with places like Shanghai. It’s a good sector to be in,” said Standard & Poor’s associate director for Asian Equities Research Lai Yeu Huan.

In late December, CapitaLand struck a deal with Shenzhen International Trust & Investment Co. to build and manage shopping malls across China.

CapitaLand paid S$196 million for 51 percent stakes in six malls that will become operational from mid-2005 to early 2006, and identified another 14 developments that will also have Wal-Mart as anchor tenant for acquisition by end-2005.

(Shenzhen Daily January 6, 2005)