How CapitaMalls Asia could gain edge against rivals in China

Competitors feared to adapt fast.

Barclays Research compared CMA and competitor malls in Xi’an and Beijing.

Barclays noted that CMA’s malls are superior in terms of execution and positioning to its immediate competitors; although it believes competitors will adapt fast, and could undercut CMA with lower or free rents, especially those who have bought the land cheap or have residential components to subsidize the funding for the retail space.

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There is also increasing competition from traditional residential developers which have shifted focus to retail due to the tightening of the residential sector.

We also saw similar brands and retailers operating across both CMA and competitor malls, implying there is little brand/retailer loyalty to a particular mall operator.

Being a pure retail and foreign operator, CMA has to constantly innovate, reposition and work harder to bring in new concepts and tenants to keep ahead.

Nevertheless, we believe the market is sufficiently large and CMA’s strategy is sustainable, even if returns take a little longer.