Shopping mall developer readies China investment plan

Inter Ikea Center Group, one of Europe's leading shopping center developers, is working on an investment plan for its next round of expansion in China.

The plan, estimated to cost no less than what IICG has spent on its first five-year projects in China from 2009 to 2013, is expected to be released in six to eight months, said the company's Managing Director John Tegner.

The company has injected 10 billion yuan ($1.6 billion) in the past five years into three shopping centers in Beijing, Wuxi in Jiangsu province, and Wuhan in Hubei province and will launch a shopping center project in Shanghai, which will cost 4 billion yuan.

Tegner said the company is researching the Chinese market in preparation for the new expansion plan, trying to choose 15 key cities as locations for future shopping centers.

Some of the cities will be in the country's coastal areas, possibly Guangzhou in Guangdong province, Hangzhou in Zhejiang province and Tianjin. Some will be in inland regions such as Chengdu in Sichuan province and Chongqing in Southwest China.

The company, which was established in 2001, is jointly owned by the Inter Ikea Group and the IKEA Group with its headquarters in Copenhagen, Denmark. It specializes in the development, operation and management of shopping centers in partnership with IKEA.

Tegner said that IKEA has decided to launch three projects annually in China starting from 2015, a stimulus to IICG to complete the expansion plan as soon as possible.

"IICG is launching shopping centers anchored by IKEA in China. This has proven to be a successful concept in Europe and Russia and we are certain that we will enjoy the same success in the Chinese market," he said.

The investment plan will specify how many cities will be chosen as locations for shopping centers and which cities need two or more centers.

"We believe (that China) will grow into our largest market through carrying out our long-term development strategy," Tegner said.

"Our fast expansion in China calls for a large sum of funds, half of which will come from our two shareholders as capital fund and the rest will be bank loans," Tegner said.

"Our confidence in the Chinese market lies in our first successful expansion plans which are well exceeding expectations," said Ding Hui, managing director of IICG China.

The company's three current projects have a leasing rate well above the market average, Ding said.

The company's average leasing rate reached 56 percent as of August. The project in Wuxi, scheduled to open in 2013, is 60 percent leased. The one in Beijing, opening in 2014, is 52 percent leased and the one in Wuhan, which will open in 2015, is 58 percent leased.