GAZELEY Properties Ltd, a wholly owned unit of Wal-Mart Stores Inc, plans to invest US$1 billion over three years to build warehouses in China, capitalizing on the nation's retail and trade boom.

"We are establishing ourselves firmly in China, a market with an annual growth of about 30 percent," Chief Executive Officer Patrick McGillycuddy said in Shanghai yesterday.

The investment comes as Wal-Mart is expanding aggressively in China.

UK-based Gazeley is a preferred developer for the retail giant in many markets, the company said.

Gazeley has started construction of two projects in China since it entered the market last year.

It will deliver its first project - a 42,000-square-meter distribution center in China's northern city of Tianjin - to its clients in September.

Meanwhile, construction of a 40,000-square-meter distribution facility in Jiaxing in Zhejiang Province neighboring Shanghai is scheduled to be finished in January next year.

Deals to build new projects in Shanghai, Beijing, Guangzhou, Chengdu and Chongqing are close to be finalized and will be built by 2009, the company said.

"Warehousing is still at an early stage of development in China, but the growth potential is huge," said Jack Yang, Gazeley's China director.

He said revenue from Wal-Mart is expected to make up five percent to 10 percent of the company's total China sales.

Wal-Mart, which operates more than 70 stores in 36 Chinese cities, announced earlier this year that it will buy Trust-Mart outlets. That chain owns 101 outlets in 34 cities across China.

China's logistics boom has lured global leaders such as ProLogis and AMB to gain an early foothold in the market.

ProLogis has invested in 18 Chinese cities since it entered the market in 2003.