Swire bent on ‘not missing the boat’
Swire Properties Ltd — one of Hong Kong’s major property developers — will have 40 percent of its worldwide real estate development focused on the mainland by next year, according to the company’s top management.
“When our Dazhongli project in Shanghai is up and r u n n i n g b y n e x t y e a r, o u r property development on the mainland, in terms of total floor space, will reach 40 percent of our global portfolio,” said Guy Bradley, chief executive of Swire Properties.
The proportion, he said, will increase fur ther if the company enters into a joint venture with China CITIC Real Estate Co Ltd in Dalian, Liaoning province.
The two parties have signed a framework agreement to develop a commercial complex with residential units, marking Swire’s foray into the mainland’s housing market.
“If everything goes according to plan, the Dalian project will open in 2019,” Bradley said.
Currently, Swire has four commercial projects in mainland — Taikoo Li Sanlitun and INDIGO in Beijing, Taikoo Hui in Guangzhou and Chengdu’s Taikoo Li Daci Temple. The INDIGO and the Daci Temple projects are a 50:50 joint venture with Hong Kong-listed developer Sino-Ocean Land Holdings Ltd.
“If such cooperation is a marriage and we already have two babies, we are definitely going to have more in future,” said Li Ming, chairman and chief executive officer of SinoOcean Land.
Bradley said Swire prefers to have more projects in cities in which they are already present as they are more familiar with the local market and regulations.
“But if there are projects in attractive locations, we are also happy to expand to other cities,” said Bradley, adding that Swire Properties is location-driven and is disciplined in this regard.
The choice of the location for a commercial-proper ty project is one of the key reasons for its success or failure, especially with growing market competition, said Dong Yue, an analyst with international real estate agency Savills.
“Besides, developers’ management capabilities matter a lot,” he said.
Swire Properties’ mainland projects’ profit contribution, however, is currently lower than 40 percent in the comp a n y ’s g l o b a l p o r t f o l i o a s some of the projects are only one or three years old. Thus, he said, the returns have yet to stabilize.
In an interview with China Daily last year, Swire Pacific Ltd Chairman John Slosar said Swire Group would be busy with property development on the Chinese mainland in the coming years.
“Our properties just managed to break even on the mainland in 2013. Five years down the road, they should be doing quite well,” Slosar said.
According to a report by international real estate ser vices provider JLL, the macro fundamentals supporting the retail sector in 60 major mainland cities remain strong.
The mainland’s consumer population has almost doubled to 130 million in the past four years, and is expected to rise to 220 million by 2020.
“However, the re tail sector is quickly finding itself in unchartered territor y, with a huge influx of new shopping malls, coinciding with the rapid adoption of e-commerce by mainland consumers,” JLL said.
“Competition is leading to mounting pressure for shopping malls to differentiate,” it said.
chief executive of Swire Properties