Hongkong Land Touts $8B Shanghai Commercial Project Amid Strategic Shift

Nearly five years after paying what was then a record RMB 31.05 billion ($4.5 billion) for a development site in Shanghai’s Xuhui district, Hongkong Land has unveiled details of an $8 billion commercial project on the plot that marks the developer’s largest single investment ever.

At an event in Shanghai on Wednesday, the Jardine Matheson-controlled builder officially christened the 1.1 million square metre (11.8 million square foot) project south of the city centre as Westbund Central, with plans to develop grade A offices, retail space, luxury residences, hotels and cultural venues on the riverside site by 2028.

The announcement comes a month after the builder unveiled a strategy overhaul aimed at doubling its recurring profit by 2035, with the company targeting to unlock up to $10 billion in capital. That plan includes shuttering its China-dominated build-to-sell residential development business and divesting assets into REITs and other third-party capital vehicles, while expanding its portfolio of “ultra-premium” commercial projects.

“Westbund Central is the Group’s largest ever single investment and underlines our strong and enduring commitment to Shanghai and China,” Hongkong Land CEO Michael Smith said in a release on Thursday. “It also epitomises our strategic pivot to focus on developing ultra-premium integrated properties in Asia’s gateway cities. We are confident that it will become an extraordinary, globally renowned ecosystem for lifestyle and business, connecting and inspiring people for generations to come.”

Flagship Project

Hongkong Land designated Westbund Central as an “anchor gateway city project”, joining the builder’s portfolio of flagship commercial developments in Hong Kong’s Central district and Singapore’s Marina Bay area.

Westbund Central will also serve as a flagship of the company’s Central series of prime commercial projects, which in mainland China has seen a total investment of $11.5 billion (RMB 83 billion) across an approximately 3 million square metre portfolio spanning a completed Beijing complex and pipeline projects in Nanjing, Chongqing and Suzhou.

“Westbund Central will form an integral part of our Central Series of world-class commercial properties that will extend across key Chinese and Asian cities,” said Hongkong Land executive director and chief commercial officer Alvin Kong. “Its scale, quality and breadth of offering are astounding. Imbued with modern sophistication, culture and sustainability, Westbund Central will redefine the urban retail, workspace and hospitality experience for millions of local people and visitors to Shanghai.”

Scheduled to complete in phases, Westbund Central will feature 650,000 square metres of grade A offices, 240,000 square metres of retail space, 160,000 square metres of luxury waterfront residences, two Mandarin Oriental hotels totaling 55,000 square metres, as well as 50,000 square metres of cultural venues upon final completion in 2028. The 10,000 square metre first phase of the project’s retail element opened in 2024.

The project will also feature 300 serviced apartments operated by Jardine Matheson’s Mandarin Oriental Hotel Group, bringing Hongkong Land’s rental apartment portfolio to around 1,200 units upon their launch in 2028.

“Westbund Central is the latest chapter in our 27-year history of developing the finest quality residences, offices, hotels and retail in the Chinese mainland,” Smith said.

Hongkong Land also gave an update on its residential project adjacent to Westbund Central – The Central Residences West Bund (Blocks A and B) – with over 97 percent of the project’s 183 completed apartments now leased. A further 809 units are expected to be launched in early 2025.

The builder had teamed up with state-backed builder China Merchants Shekou and a unit of municipal investment firm Shanghai Huicheng Group to purchase the 21,943 square metre site for RMB 4.73 billion (then $700 million) in 2022.

Q3 Profit Improvement

The Westbund Central announcement comes a few weeks after Hongkong Land reported an improvement in underlying profit in the third quarter, without disclosing the magnitude of the performance, with the profitability increase attributed to more completions from its build-to-sell residential projects in mainland China.

Despite the third quarter uptick, the builder continued to forecast a significant year-on-year decline in full year 2024 underlying profit.

Hongkong Land’s strategy revamp is part of a ten-year plan announced in late October, with the company planning to re-allocate capital from condo developments to integrated commercial projects in Asian gateway cities. Hongkong Land will focus on completing the construction of all committed projects, while refraining from taking on new standalone build-to-sell projects in the future, the company said.

The plan also calls for Hongkong Land to move beyond developing investment properties for its own portfolio to become a fee-earning manager of third party capital as it aims to grow its assets under management to $97 billion by 2035 through a combination of LP capital partnerships, private funds, and REITs.