China's State Administration of Foreign Exchange is seeking to acquire a large shopping center in Paris with the aim of diversifying its investment portfolio into the European high-end commercial real estate market, according to a French media report.

SAFE, which manages the country's $3.4 trillion in foreign-exchange reserves, is among the potential bidders to buy the Beaugrenelle shopping mall situated in a prime location of the capital, the French newspaper Le Figaro reported.

The report didn't specify whether SAFE had designated any fund or investment company to make the bid. SAFE established a fully owned company, SAFE Investment Co Ltd, in Hong Kong in 1997. That entity has served as an investment arm of SAFE, helping manage its foreign-exchange reserves through overseas investment.

The approximate value of the potential acquisition is at least 700 million euros ($947 million), which will make it one of the most expensive retail spaces in France if the deal proceeds, according to the report.

The owners of the shopping center, Gecina SA, a French real estate investment trust that holds an 85 percent stake, and the APSYS Group, a commercial property operator, declined to comment when contacted by China Daily.

No comment was available from SAFE either.

Industry experts said the acquisition is a logical move for SAFE, as it is expected to offer safe and stable investment returns in the long term, given the shopping center's ideal location, just stone's throw away from the Eiffel Tower on the left bank of the River Seine.

Zheng Chaoyu, a currency expert at Renmin University, said that SAFE is diversifying its investment portfolio to lower risks. It sees great potential in physical assets in Europe, which may be safer or yield higher returns than US government securities.

"China is now growing more cautious about Western financial products. It is making investments on its own to guarantee the value of foreign reserves," said Zheng. "After all, it is safer to put the eggs in more than just a few baskets."

The other four potential bidders are French real estate company Altarea SCA, British property investment company Hammerson Plc, US-based real estate fund Rockspring Property Investment Managers LLP and German fund Union Investment, according to the report.

One person with knowledge of the deal was quoted by Le Figaro as saying that SAFE has a good chance to win the bid, as the other candidates will find it difficult to convince their shareholders to pay more than 700 million euros with a yield of less than 4.5 percent, while a sovereign fund can be satisfied with the rate.

The Beaugrenelle shopping center represents an investment of more than 450 million euros. It's scheduled to open on Oct 23 with 120 shops, one department store, a 2,000-seat cinema and a dozen restaurants with a view of the River Seine, according to the press kit of the shopping center.