COUNTING CLIENTS: The Beijing Financial Street Shopping Center, home to many international brands, has seen only minimal customer traffic since opening in 2007 (CFP)

Entering the Rmbox Mall in Wangjing, one of Beijing's largest communities in its northeast suburb, the first-time shopper to the four-storey, 110,000-squaremeter shopping center might doubt the mall is even open for business. A majority of the nearly 100 store fronts are dark and vacant with "For Lease" ads draped across each space. Stores that are open have more shopping assistants than customers perusing the shelves.

"Business has been bad since it opened in 2008," said Wang Wei, a resident living nearby.

In the past three years, three malls have sprung up within half a kilometer of Wang's neighborhood. The three shopping malls have a combined floor space of 1 million square meters, equivalent to 40 American football fields. Shopper attendance in that time, however, has been substantially less than fan totals at the China Football Association Super League. The oversupply of mall space in Wangjing is part of the construction fever that has hit most of China's urban centers.

China was the most active retail property market, according to a report by the Londonbased commercial real estate advisor CBRE Ltd., compared to the 70 countries it surveyed.

Chinese cities will continue to dominate development activity over the next few years. Eight out of the top 10 most active markets globally are in China. North China's Tianjin Municipality heads the list with 2.4 million square meters currently under construction, followed by Shenyang, capital of northeast China' Liaoning Province and Chengdu, capital of southwest China's Sichuan Province.

Too many

Indeed in many Chinese cities growth of retail property stock has increased much faster than the retail outlets themselves, causing "oversupply" to become an overarching theme in a number of markets, said James Hawkey, Executive Consultant, of Cushman & Wakefield, China, a real estate service firm based in the United States.

A report from Knight Frank LLP, an independent global property consultancy based in the UK, showed that annual gross rental yields on commercial properties in major cities such as Beijing and Shanghai have fallen to 4-6 percent from around 10 percent several years ago.

Commercial properties in Beijing and Shanghai are now generating annual gross rental returns below China's official oneyear lending rate of 6.56 percent. That means if investors borrow and plough that money into commercial property, they stand to lose because the returns won't even cover the borrowing cost.

The report stated that while investors are predominantly focused on China's first-tier cities like Beijing and Shanghai, their interest in second- and third-tier, and even smaller cities, has been steadily growing.

Huizhou, a small city in southeast coastal Guangdong Province, has a total area of 600,000 square meters of shopping malls.

Given its total population of 1.15 million, every two residents could share one square meter of shopping mall. Guangzhou-based Southern Metropolis Daily reported that business in most of the shopping malls in Huizhou is flat.