The company, through its fully owned subsidiary Hillsvale Resort Pte Ltd, has entered into a joint venture agreement with Alpha to buy a 42.5 percent stake in Equity Rainbow II for $126.5 million.

Equity Rainbow II runs Lifehub, a lifestyle mall in the city's Jinqiao area. The remaining 57.5 percent is held by Alpha's Alpha Asia Macro Trends Fund II and a co-investor.

Ang Wee Gee, chief executive officer of Keppel Land, said that this was the first time that Keppel Land China and Alpha collaborated to buy a premium property in a well-located area in Shanghai.

"This is in line with our strategy to scale up in high-growth cities such as Shanghai where we have established a firm foothold,'' Ang said.

Located next to Metro line 8, Lifehub has 114,732 square meters of retail and office space for a monthly average footfall of 1.25 million visitors since it started operations in 2009.

The mall is more than 99 percent leased with brands including E-Mart, Gome, Uniqlo, Nike, Adidas, Lexus and Mercedes Benz.

Shanghai recorded a total of 677.7 billion yuan ($108.8 billion) of retail sales in 2011 and became the second-largest retail market in China. The figure is expected to grow further with retail sales projected to increase 75 percent between 2011 and 2016, Ang said.

"The growing affluence and rising income of Shanghainese people will see strong demand for well-located premier retail malls," Ang added.