Shopping malls might be doing badly in China, it does not stop local government from building new ones, the bigger the better, says real estate expert Sam Crispin in Forbes. Even when the shoppers in the end do not show up.
“The bigger the shopping centre, the more potential revenue in theory that the local government can get from business tax, from sales in the shopping centre, and rental income, all of which is taxable,” says Sam Crispin, Director for Urbanisation Services at professional services company PwC. “Increasing tax revenue is one of the objectives of city planners, so sometimes they appear to plan big shopping centres whether they are commercially rational or not.”
Many developers flourished through strong government connections, with the governments often going directly to developers to draw up plans as sites came to market. However, aggressive government plans didn’t always translate into consumer demand, particularly given the large mall size frequently demanded by the local planners.
Sam Crispin is also one of our experts on China´s outbound investments. Check out this list for more.