US$700 Million Investment in China's Real Estate

Macquarie Bank is expected to launch an Asian listed property trust within the next year with a focus on retail assets, after yesterday paying $US93 million (AU$123.4 million) for nine shopping centres in China.

It is expected the new trust will be listed in Singapore but available to Australian investors.

Although the bank declined to give much detail on the China deal, it said the properties were in major shopping precincts and underpinned by long-term leases to a strong mix of tenants.

Macquarie Bank's deal comes as the Simon Property Group, one of the biggest real estate and shopping mall developers in the United States, said that it had formed a partnership with Morgan Stanley and a state-owned Chinese company to develop as many as 12 shopping centres in China.

The companies did not disclose their investment in the centres, all of which would be anchored by Wal-Mart outlets.

Analysts said the projects could cost as much as $US700 million to develop, which would make the deal one of the largest foreign real estate investments ever made in China.

Simon Property and Morgan Stanley are just the latest foreign companies hoping to cash in on China's booming retail and real estate markets.

The retail boom is so feverish that the country is now home to some of the world's most extravagant shopping malls, including a pair of mega malls under construction in Beijing and the southern factory city of Dongguan which will both surpass the West Edmonton Mall in Canada as the world's largest.

Dozens of cities across China have also been building giant residential housing developments in the last few years and many of these developments, which resemble miniature cities, are beginning to attract huge new shopping centres.

Wal-Mart has 47 stores and plans as many as 60 in China by the end of this year. Its first outlet in Shanghai is expected to open later this week.

For Simon Property, one of the world's biggest real estate companies, the investment is its first big move into China.

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