Singapore developer CapitaLand Ltd. on Friday inked an agreement to take a 65 percent stake in 15 malls across China for around S$687 million (US$404 million), strengthening an alliance with Wal-Mart Stores Inc. to tap the mainland's fast-growing retail market.

CapitaLand already has stakes in six China malls that have the world's biggest retailer as the anchor tenant, and the latest deal with Wal-Mart's Chinese partner, Shenzhen International Trust & Investment Co. Ltd., or SZITIC, will raise that figure to 21.

The announcement of CapitaLand's latest China deal comes one day after the company lost out in the bidding for Singapore's Business & Financial Center site, the biggest tender of commercial land in the city-state since the 1997/98 Asian financial crisis.

As part of the deal with SZITIC, CapitaLand, which gets nearly 70 percent of its earnings from overseas, has an option to invest in 17 other retail malls in China that will be anchored by Wal-Mart.

CapitaLand also gets a first right of refusal to participate in a commercial project under development in Shenzhen that will house the U.S. retailer's Asia head office and a Sam's Club outlet, which is a member-only warehouse operated by Wal-Mart.

The malls will be managed by a joint venture between CapitaLand and SZITIC, which is owned by the city government of Shenzhen.

CapitaLand chief executive Liew Mun Leong said the partnership would give the Singapore developer a start in the fast-growing China retail property market "with the unique opportunity to penetrate the relatively untapped provincial cities."

Analysts were generally bullish about CapitaLand's latest foray into China, saying there are opportunities for faster growth and higher returns in the country.

In May, China's retail sales grew 12.8 percent from a year earlier, according to figures from the National Bureau of Statistics.

CapitaLand said the 21 malls would cater to the basic shopping needs of the local population, with most having a gross floor area of between 30,000 and 50,000 square meters each.

(Shenzhen Daily July 11, 2005)