CHINA - Henderson Global Investors and developer RDM are advising a $500m (€400m) joint venture partnership between several institutional investors targeting luxury retail developments in China.
The 'Silk Road' joint venture includes Hong Kong-based fund manager Gaw Capital Partners, an unnamed "major US institution" and Luxembourg-based China Outlet Mall, controlled by Jacopo Mazzei.
Mazzei is also chief executive at RDM, an Italian real estate developer and operator that has been working with Henderson since 2004 on a number of designer outlet mall investments in Europe.
The two firms are looking to replicate their European expertise in China to take advantage of increasing demand for luxury retail from a growing middle class.
The first investment for the joint venture is the acquisition of Florentia Village, China's first Italian-style outlet village designed by RDM.
"The Florentia Village project has established a new benchmark for Designer Outlets in China," said Mazzei. "The brand mix achieved in the centre is one of the most prestigious of the world and unheard of in China."
The joint venture plans to develop at least four more Italian-style outlet malls in major Chinese cities.
Sites have been identified, with construction scheduled to start in 2012.
Chris Reilly, director at Henderson Property Asia, said: "We are extremely confident about the prospects for the luxury retail sector in China.
"Chinese consumers are very brand conscious and expect a sophisticated shopping experience with high-quality service and premier brands.
"RDM's Designer Outlet Centres provide this combination at significantly discounted prices, which is a formula for success."
Florentia Village opened near Beijing in 2011 and is the only outlet in China today with Prada as tenants.
Alice Breheny, head of research at Henderson, said: "Luxury brands have some of the most ambitious expansion plans for the Chinese market but will be more astute than mass-market retailers with regards to location.
"Specialist outlet malls that bring together likeminded retailers, and provide the quality of shopping experience discerning Chinese consumers increasingly demand, should perform very well."