Made in China

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Otto Nager, Chairman of Turkmall and Multi Turkmall.

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Cityscape China held in Shanghai attracted foreigners from over 15 countries.

Foreign developers are moving to China. Otto Nager, Chairman of Multi Turkmall and Turkmall explains why he is building shopping malls in one of the most complicated countries on the planet. Kim Latham reports.

The German Chairman of Multi Turkmall and Turkmall is a busy man. With real estate projects spanning 18 countries it's a surprise to find him so knowledgeable about each and every one but this expertise has ensured a smooth step into the powerhouse that is China.

"We had a reputation for being so good in Europe and this was very well received in China. You have to have a track record for the Chinese officials to want to work with you," says Otto Nager, Chairman of Multi Turkmall and Turkmall.

Turkmall was set up in 1992 with headquarters in Istanbul and was initially the parent company. The company began to buy, develop and lease retail and entertainment destinations with a focus on Turkey and Europe.

Today, it is one of the biggest retail development and investment companies in Europe with Multi Turkmall turnover for 2008 reaching US$1.4bn in Turkey alone.

Turkmall, as well as being a shareholder in Ikea in Turkey, Bulgaria and Romania, enjoys much success with developments in Syria, Tunisia and Libya.

Following this success, Nager later formed another company, Multi Turk.

In 2004, Nager began to look around China with encouragement from investment bankers Morgan Stanley, now a main shareholder. At the time, business didn't take off due to "incompetent people on the Chinese ground."

Later Nager went armed with a Sovereign fund from the Arabian Gulf and a newly-formed joint venture with Fiba Holdings, a Turkish development, investment and banking company.

In the hunt for an apt Chinese local partner, Red Star, a Chinese company with headquarters in Shanghai and with expertise in developing furniture exhibition malls on a scale of 200,000 sq metres a venue was the ideal suitor.

"It's not difficult to do business there if you understand Chinese culture. The prerequisites are you have to know your business and you have to have money," he says.

Under construction

Nager was quickly introduced on an "offical platform" to Beijing, Shanghai, Shenyang, Wuxi and Nanjing among other cities. Ideas were formed along with predevelopment plans.

"Our first project is under construction in Shenyang in Northern China. Our shopping centre and Ikea will be built on the same piece of land, we will share it. We will do this in other cities," he says.

Nager is impressed by China's infrastructure comparing it with Japan which he describes as "unbelievable."

"China is a very dynamic market. The Western world has not yet understood China so far. You have to go there and see it to believe it," he says.

China is one of Dubai's largest trade partners. The nation with a staggering population of some 3.1 billion as of this year is the emirate's 12th biggest export destination. An increase in property investment which saw a 31.4% rise in 2007 saw many a company looking for a way in.

Middle East developers

In 2006, Dubai-based developer Emaar opened offices in China with the aim of developing modern, community-based, residential properties as well as retail malls, fitness centres, schools and hotels in both the financial capital of Shanghai and its cultural counterpart, Beijing.

China, it seems, was the next ambitious step after expansion into India, Pakistan, Indonesia and Singapore.

In April of this year, the developer signed a MoU with Shanghai China-News Enterprise Development Ltd, a Chinese government entity and subsidiary of the People's Daily Shanghai branch to explore infrastructure development projects in key cities.

"Emaar's entry into China completes a strategic leg of our international expansion programme that focused on three booming markets - the Middle East, the India Subcontinent and now China," says Mr Mohamed Ali Alabbar, Chairman of Emaar Properties.

Dubai-based developer Limitless is also targeting the Chinese market although as of yet the company has not launched projects on the mainland.

More and more developers appear keen to capture some of the huge Chinese market as well as to entice the wealthy Chinese to invest in the Middle East.

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