tock exchange. It will be one of the companies seeking to catch the tailwinds that look particularly auspicious this year. In particular, the Chinese government is touting policies to stimulate household consumption. On top of that, domestic tourism is recovering from a disastrous year that saw trips by Chinese within their own country dip by 22 per cent, with the fourth quarter a low point because of government-imposed movement restrictions. The rebound expected this year is on the order of 80 per cent. Among the drivers that will benefit domestic tourism and domestic factory outlet centres: a preference — perhaps only short-medium term — among the Chinese to stay at home rather than travel overseas, an ongoing reduction in flight capacity, and bureaucratic delays in processing visa and passport applications. The bar is set low, so the recovery should be strong Sasseur’s top line suffered badly from the mayhem of 2022, with sales for the year at its centres down 15.5 per cent and rental income off by 2.8 per cent. The bottom line rose slightly, by 0.4 per cent. Both rental income and bottom line profit benefited significantly in the flat sales environment from the company’s business model of indexing base rent: rents are structured with a base and variable component, the former of which is upped by 3 per cent annually, providing a softening effect when sales growth is sluggish. Indeed, in 2022, nearly 75 per cent of rental income was derived from the base component. Total annual sales at the four outlet centres within the REIT amount to RMB 3534.8 million, or approximately US$513 million at current exchange rates. The average occupancy across the centres is 97.2 per cent. More than half of the portfolio’s sales are attributable to the oldest of the four centres, Chongqing Lianjiang, which opened in 2008 and has a net leasable area (NLA) of 50,885 square metres with almost 400 tenants. It is 100 per cent occupied and enjoys 4.2 million shopper visits a year.  It also has almost a million VIP members.  Sasseur has another centre in Chongqing too, in Bishan. The city is now China’s largest and the two malls are serving a trading area with more than 30 million people. The other centres in the REIT are in Hefei and Kunming. The larger portfolio of 16 centres under the Sasseur Group umbrella is much more geographically diverse and is about to get more so. This year, a new center is scheduled to open in Shijiazhuang, 300 kilometres south of Beijing, followed by another sometime next year in Wulumuqi in the far west in Xinjiang Province. Together, the two centres will add more than 200,000 square metres of floor area to the company portfolio. Luxury brands are there but athletic apparel is still king Sasseur’s outlet malls offer their fair share of international luxury but athletic apparel and footwear brands like Nike and Adidas are still among the malls’ best sellers, particularly at the Chongqing Bishan and Kunming centres. While attrition of the fashion categories at mainstream malls has been a steady fact of life over the past decade, the same has not been true of the outlet sector, which still offers much more of a treasure hunt experience that aspirational consumers love. Almost half of the mall leasable area in Sasseur’s outlet portfolio is given over to domestic fashion and international brands, an almost unheard of percentage of tenant space in today’s mainstream malls anywhere in the world. International brands contribute 14 per cent of NLA and 19 per cent of revenues while domestic fashion accounts for 34 per cent of NLA and 43 per cent of gross revenues. Despite the heavy concentration of space in the branded fashion category, Sasseur is mindful of the need to keep the revenue allocation balanced and avoid excessive dependency on a few tenants. No single tenant in the portfolio accounts for more than 5 per cent of revenue and the top 10 tenants account for only around 15 per cent.  The government is putting its shoulder to the consumption wheel The outlet industry in China, and more broadly speaking in non-Japan Asia, is far from mature as in North America and Europe. There is still substantial room for growth but it should be remembered that the peak wave of outlet centres in the West — those opened in the 1990s and early 2000s — occurred at a time when there was no competition from e-commerce. Today’s new centres have e-commerce to contend with and indeed China’s outlet mall developers see the likeso of Alibaba as their key competitors. Consequently, they need to provide a unique experience that extends beyond just great deals on high-end fashion. Sasseur is therefore strongly focused on design features, food and beverage, entertainment and amenities at its centres. The Chinese government is trying to do its bit. It is targeting real GDP growth of about five percent this year and an urban unemployment rate of around 5.5 per cent. The government aims to create around 12 million new urban jobs this year, and is making domestic consumption a priority after decades of focusing on exports to drive the country’s economic growth. While the central government is spruiking consumption as an engine of growth, some Chinese cities have increased their respective growth targets. These include Chongqing and Hefei where three of Sasseur REIT’s four outlet centres are located. Right now, the year ahead looks bright for Sasseur and the Chinese outlet industry in general. People are keen to get out and enjoy their new-found freedom, and Sasseur is ready with the spaces for them to do it.