On August 10th, during the midday, Swire Properties (HK.01972) released its interim results for 2023: Revenue increased by 5.9% YoY to HKD 7.297 billion (compared to HKD 6.91 billion in the same period of 2022), and attributable net profit to shareholders was HKD 2.223 billion (compared to HKD 4.348 billion in the same period of 2022). The decrease in net profit was mainly due to a property valuation loss of HKD 1.332 billion in the first half of this year, whereas the same period last year saw a property valuation profit of HKD 701 million.
The financial report indicates that the group’s primary source of income is from investment properties, with this segment’s revenue increasing by 7.7% to HKD 6.732 billion (compared to HKD 6.265 billion in 2022). Among the investment properties, retail properties, the most core part, saw a significant YoY increase of 17.5% to HKD 3.51 billion (compared to HKD 2.986 billion in 2022). Retail properties “Taikoo Li” and “Swire Mall” are the most renowned within this category.
Benefitting from the post-pandemic recovery in retail sales and additional rental income from the increased equity stake in Chengdu Taikoo Li at the end of February 2023, the total attributable rental income from Mainland China’s retail properties increased by 13% to HKD 2.584 billion in the first half of the year. Apart from rent support and changes in the value of the Renminbi, total attributable rental income increased by 19%.
Among the completed Mainland shopping centers are Beijing Sanlitun Taikoo Li (wholly owned), Beijing Indigo (50% equity owned), Guangzhou Taikoo Hui (97% equity owned), Chengdu Sino-Ocean Taikoo Li (wholly owned), Hkri Taikoo Hui (50% equity owned), and Taikoo Li Qiantan (50% equity owned).
The financial report also discloses the latest operational status and future development of the group’s six iconic Mainland properties, as well as the latest progress on the HKD 100 billion investment plan.
Shanghai Bund’s retail sales surged by 169%, and Chengdu Sino-Ocean Taikoo Li will be renamed Chengdu Taikoo Li
In Mainland China, with the lifting of epidemic restrictions, foot traffic has significantly improved, and the retail sales of many shopping malls have greatly surpassed pre-pandemic levels. In the first half of the year, retail sales in Mainland China (excluding automobile retailers) increased by 41%.
For Beijing Sanlitun Taikoo Li, Chengdu Sino-Ocean Taikoo Li, Guangzhou Taikoo Hui, Beijing Indigo, Hkri Taikoo Hui, and Taikoo Li Qiantan, retail sales growth percentages compared to the same period last year were 29%, 27%, 16%, 34%, 72%, and 169% respectively.
Beijing Sanlitun Taikoo Li:
Located in the Sanlitun area of Chaoyang District, Beijing, is the group’s first retail property development project in Mainland China, consisting of South, North, and West retail areas with approximately 281 retail shops. In the first half of the year, retail sales increased by 29% after the easing of epidemic restrictions and the reopening of the Workers’ Stadium, with foot traffic returning to the level of 2021. The mall had a leasing rate of 97% at the end of June.
To enhance its leading position in the upscale market in Beijing, structural engineering is currently being carried out in the North area of Sanlitun Taikoo Li, optimizing tenant mix. Therefore, total rental income for the first half of 2023 decreased by 5%, but excluding the impact of Renminbi valuation changes, rental income increased by 1%.
Chengdu Sino-Ocean Taikoo Li:
Located in Jinjiang District, Chengdu, is the group’s second Taikoo Li project in Mainland China. In February 2023, the group acquired the remaining equity stake in Chengdu Sino-Ocean Taikoo Li, making it wholly owned by Swire Properties. In August, the project will be renamed “Chengdu Taikoo Li.”
Excluding the impact of increased equity stakes, retail sales and total rental income for Chengdu Sino-Ocean Taikoo Li increased by 27% and 5%, respectively in the first half of the year. The mall had a leasing rate of 96% at the end of June.
Guangzhou Taikoo Hui:
Located in Tianhe District, Guangzhou, it’s a popular shopping center. Retail sales and total rental income increased by 16% and 4% respectively in the first half of the year, reflecting post-pandemic market recovery. The tenant mix has been optimized, and the mall had a leasing rate of 100% at the end of June.
Beijing Indigo:
Located in Jiangtai, Chaoyang District, Beijing, the mall has become a major fashion and fashion shopping center in the northeastern part of the city. Retail sales increased by 34% in the first half of the year, and the leasing rate was 100% at the end of June.
Hkri Taikoo Hui:
Located in Nanjing West Road, Jing’an District, Shanghai, it’s the group’s second Taikoo Hui project in Mainland China. Benefiting from optimized tenant mix and increased foot traffic, retail sales surged by 72% in the first half of the year. Due to ongoing renovations, total rental income decreased by 11%, and the leasing rate was 96% at the end of June.
Taikoo Li Qiantan:
Located in Pudong New Area, Shanghai, it’s a retail project jointly developed by the group and Shanghai Lujiazui Financial & Trade Zone Development Co., Ltd., officially opened in September 2021. Retail sales and foot traffic steadily increased in the first half of the year. As of the end of June, tenants had committed to leasing 95% of retail space, of which 87% was already open for business.
The group stated that overall demand for retail space is expected to remain stable and recover steadily in the second half of the year. In Guangzhou and Chengdu, luxury retail brands are showing strong demand for retail space, while luxury fashion, cosmetics, and lifestyle brands, as well as the catering industry, in Shanghai, are expected to maintain stable demand. In Beijing, demand for retail sales and market demand for retail space will steadily recover.
Plans include doubling the total floor area in Mainland China, and Xi’an Taikoo Li is scheduled to be completed in stages by 2025.
In March 2022, the company announced plans to invest HKD 100 billion over the next decade, with HKD 50 billion dedicated to active development in the Mainland China market.
As of August 4th, the committed investment plan totaled about HKD 39 billion, with HKD 17 billion in Mainland China. Key projects that have been implemented include Xi’an Taikoo Li, a retail-led comprehensive development project in Xi’an, and Sanya International Duty-Free City Phase III, a retail-led high-end resort project in Sanya.
- Xi’an Taikoo Li: Located in Beilin District, Xi’an, including retail and cultural facilities, a hotel, and serviced apartments. The total floor area is estimated to be approximately 2.4 million square meters. The project is being jointly developed with Xi’an Cheng Huan Cultural Investment Development Co., Ltd., with the group holding a 70% equity stake. The project is expected to be completed in stages by the end of 2025.
- Sanya: Developed in cooperation with China Tourism Group Duty-Free Corp., Ltd., the project is located in Haitang District, Sanya, and is expected to be a high-end resort project dominated by retail. The total floor area is approximately 2.2 million square meters, including underground parking and other supporting facilities. It will become Sanya International Duty-Free City Phase III. Excavation is currently underway, and the project is expected to open in stages from 2025. The group holds a 50% equity stake in the project.
Unrealized projects include more retail-led comprehensive developments in first-tier and emerging first-tier cities in Mainland China, including Guangzhou, Shanghai, and Beijing. The plan is to double the total floor area in Mainland China.
As of the close of trading on August 10th, the group’s stock price fell by 1.31% to HKD 18.14 per share, with a market value of HKD 106.1 billion.
| Source: Swire Properties
| Image Credit:Swire Properties‘s Official Website
| Editor: LeZhi
