Mainland retail rents buoy Swire Properties
Swire Properties says good performances from its office portfolio in Hong Kong and its retail portfolio in Mainland China help boost underlying profit for its latest financial year.
But in Hong Kong, its properties which traditionally rely on tourists for turnover struggled. Retail sales at The Mall, Pacific Place fell 12 per cent year-on-year, while sales at the Citygate Outlets near the airport, fell 10 per cent.
Underlying profit attributable to shareholders fell by HK$74 million (US$9.5 million) from HK$7.152 billion in 2014 to HK$7.078 billion last year. Adjusted to exclude a loss of HK$229 million from selling four hotels in the UK, underlying profit increased to HK$7.307 billion in 2015 from HK$7.152 billion the previous year.
In Hong Kong, retail sales were adversely affected by less tourist spending, and sales of luxury goods in China were weak.
“However, sales in our retail portfolios increased and demand for our retail space was firm.”
In April, Swire Properties and Sino-Ocean Land formally opened a joint-venture retail complex, SinoOcean Taikoo Li Chengdu, which has an aggregate gross floor area (GFA) of more than 1,248,000 sqft (115,943 sqm).
In July 2015, a framework agreement was entered into with a subsidiary of Shanghai Lujiazui Finance & Trade Zone Development signifying the parties’ intention to jointly develop a retail project with an aggregate GFA of about 1,330,000 sqft in Qiantan, Pudong New District in Shanghai.
This is subject to certain conditions, but if it goes ahead Swire Properties will have an equal sharing in the project.
The company expects demand for retail space in Hong Kong to generally weaken this year, with growth in demand for quality space from tenants with successful businesses.
Overall, retail sales are expected to grow modestly in Guangzhou and Beijing, and steadily in Chengdu.
Swire Properties develops and manages commercial, retail, hotel and residential properties, with a particular focus on mixed-use developments in prime locations at major mass transportation intersections. The company has investments in China, Singapore and the US.