(Yicai) July 11 -- Hang Lung Properties, a Hong Kong-based developer and shopping mall operator, has penned a deal to rent a department store building in Hangzhou’s city center, expanding its presence in the Chinese mainland's luxury retail market.

A Hang Lung subsidiary signed the 20-year lease on Hangzhou Department Store yesterday, owner Baidai Group announced late the same day. The lease will begin in April 2028 after the current agreement with local retail giant Intime Department Store expires in the February.

The leased assets include the commercial retail spaces in the store’s north and south buildings, covering an area of about 42,000 square meters, Baidai noted. The quarterly rent is CNY37.5 million (USD5.2 million), with a 4.5 percent increase every three years.

Baidai also agreed to waive three months of rent each year for the first two years, the Hangzhou-based company said.

Hang Lung mainly operates Plaza 66 malls, premium shopping destinations in many cities, including in the mainland, that host global luxury brands. The Hangzhou Department Store is within walking distance of its new Plaza 66, which is scheduled to open in the first half of next year.

Founded in 1960, Hang Lung entered the mainland market in the 1990s with flagship properties such as Plaza 66 and Grand Gateway 66 in Shanghai.

Editor: Martin Kadiev