Alibaba to Sell Stake in Chinese Hypermarket Operator

Alibaba Group has agreed to sell its shares in a Chinese hypermarket operator in a $1.7 billion deal, the latest divestment as part of the company’s efforts to focus on its core e-commerce business.

The company will sell its entire 78.7% stake in Hong Kong-listed Sun Art Retail Group to Chinese private-equity firm DCP Capital Partners for gross proceeds of up to $1.6 billion, Alibaba said Wednesday.

Alibaba expects to book a divestment loss of nearly $1.8 billion based on the estimated fair value of the consideration receivable for the sale of shares.

The e-commerce giant had bought a controlling stake in the hypermarket store operator in 2020 for $3.6 billion.

In a filing to the Hong Kong exchange Wednesday, Sun Art said that the acquirer plans to delist the company and conduct a strategic review of the hypermarket operator’s businesses.

Once a Wall Street favorite and a leader in China’s e-commerce, Alibaba is facing challenges in growing its revenue. The company is losing some of its market share amid a slowing Chinese economy and rising competition from domestic rivals like Pinduoduo and Douyin.

Last month, the company announced that it, along with a minority shareholder, had agreed to sell department-store chain Intime for $1.02 billion. The e-commerce giant said then that it anticipated to incur an over $1.0 billion loss from the sale of Intime.

Falling interest rates are sparking a rebound in interest in commercial property. However, for many first-time investors, commercial property can feel very intimidating. With commercial property, there are typically numerous different numbers, complex leases, and unfamiliar terminology.

But once you understand what to look for, the pathway into commercial becomes much clearer and far more achievable than most people realise. So, what does a smart entry point into commercial property actually look like?

If there’s one standout option, it’s typically an industrial property with value-add potential.

Why industrial is the right place to start

Among all the commercial sectors, industrial is currently the most stable and accessible. Demand is being driven by the trades, small manufacturers, logistics operators and e-commerce businesses, many of which are growing rapidly and need practical space to operate from.

Unlike retail and office properties, industrial assets are typically simpler to understand. They’re often lower maintenance, easier to lease and more resilient to changes in the economy. This makes them well-suited to first-time investors who want to enter the market with confidence.

The importance of value-add potential

When looking at entry-level opportunities, many investors make the mistake of prioritising presentation. But it’s generally not the flashiest property that delivers the best returns. It’s the one where you can create the most upside.

That might mean buying a property where the current rent is well below market value. When the lease ends, you have the opportunity to negotiate a new lease at a higher rate, instantly increasing the property’s value.

In other cases, it may be a warehouse with a short-term lease in a high-demand area, providing you the opportunity to renegotiate the terms and secure a better return. Even basic improvements like repainting, improving access, or updating signage can make a big difference to tenant demand.

Don’t chase yield for the sake of it

A common trap for first-time commercial buyers is chasing the highest yield on offer. While yield is an important consideration, it shouldn’t be the only one. A high yield can sometimes signal a risky investment, one with a poor location, limited tenant demand, or low capital growth prospects.

Instead, smart investors focus on balance. A net yield of six to seven per cent in a strong, established area with reliable tenants and good fundamentals is often a far better outcome than a nine per cent yield in a declining market.

Yield is only part of the story. A good commercial investment is one where the income is sustainable, the asset has growth potential, and the risk is well-managed.

The risks of starting with retail or office

Retail and office properties can be suitable for experienced investors, but they’re often more complex and carry higher risk, especially for those just starting out. Retail in particular has faced significant changes in recent years, with e-commerce altering the way consumers shop.

Unless the property is in a high-traffic, local strip with essential services like medical, food or personal care, vacancy risk can be high. Office space is still adapting to the post-COVID shift towards remote work, and in many cases, demand has softened. If you’re entering the commercial market for the first time, it’s better to stick to simple, functional industrial assets in proven locations.

Where to look, and why

For first-time investors, some of the best opportunities can be found in outer-metro industrial precincts or larger regional centres.

Suburbs in places like Geelong, Logan, Toowoomba or Altona North offer a compelling combination of affordability, strong tenant demand and relatively low vacancy risk.

These areas often have diverse local economies that don’t rely on a single industry and offer entry points between $600,000 and $1 million, a sweet spot where competition from institutional investors is limited and owner-occupiers are still active.

What a good entry deal looks like

Imagine purchasing an industrial shed for $750,000 with a tenant in place and a current net yield of 6.5 per cent. The lease has about 18 months left, and you know the current rent is around $10,000 below market.

Once the lease expires, you can renegotiate or re-lease at the correct rate, increasing the income and, by extension, the value of the asset.

That’s a textbook example of a good commercial entry point. The property is tenanted, it generates income from day one, and it has a clear path to growing your equity within 12 to 24 months.

Abdullah Nouh is the founder of Mecca Property Group, a boutique buyer’s agency in Melbourne helping Australians build wealth through strategic property investment.