TH Real Estate and Gaw Capital Partners have launched a China outlet mall fund.

TH Real Estate will manage the vehicle, with Gaw Capital co-capital sponsor.

The companies said they would aim to create a $2bn (€1.8bn) portfolio over the next five years.

Two existing assets, in Jingjin and Shanghai and operating under the Florentia Village concept, have been used to see the fund.

Kenneth Gaw, president at Gaw Capital Partners, said rapid expansion of China’s middle class and spending power had been extraordinary – “especially as seen in the retail and tourism sectors”.

Harry Tan, head of research for Asia-Pacific at TH Real Estate, said China was one of the fastest growing and most lucrative retail markets in the world.

“Urbanisation and the creation of wealth have seen Chinese consumers’ focus shift from basic needs to improving their quality of life, with an additional emphasis on brand consciousness,” he said.

“Luxury designer outlet malls are in prime position to benefit from these structural trends, yet supply remains at extremely low levels relative to developed markets.”

RDM Group, a developer with which Henderson Global Investors has worked in the past, will manage the portfolio.

Launched in 2012, the $500m ‘Silk Road’ joint venture between several institutional investors included Florentia Village assets designed by RDM.