Swire Properties Reports $153M Loss on Falling Office Values, CFO to Retire

Swire Properties reported an attributable loss of HK$1.2 billion ($153.1 million) for the first half of 2025, reversing a year-earlier profit of HK$1.8 billion, on markdowns on investment properties in the Hong Kong-based builder’s hometown office portfolio.

The Hong Kong office market “remained challenging” during the first six months of this year as weak demand, high vacancy and new building debuts pressured rents, the real estate arm of Swire Pacific said Thursday in a stock filing.

Swire recorded a fair value loss on its investment properties of HK$4.7 billion in the January to June period, widening from a HK$879 million dip a year earlier, with the company’s Hong Kong office portfolio leading the slide in both periods, according to the results. 

Underlying profit, which adjusts for changes in fair value of investment properties, rose 15 percent to HK$4.4 billion thanks to divestment of approximately HK$1 billion including the disposals of Swire’s stake in the Brickell City Centre retail mall in Miami and an adjacent site. 

“Our strategic approach to capital recycling is helping to reinforce the company’s overall focus on shareholder value while enabling reinvestment into high-growth potential opportunities in our core markets of Hong Kong, the Chinese Mainland and South East Asia,” said Swire Properties chairman Guy Bradley.

Excluding its one-off sales, Swire’s recurring underlying profit declined 4 percent to HK$3.4 billion in the first half of 2025, primarily due to reduced rental income from the company’s Hong Kong office assets, which was only partially offset by modest growth in rental income from its mainland China retail properties.

Hong Kong Office Slides

Excluding new projects, occupancy levels at Swire’s flagship Pacific Place complex in Admiralty and its Taikoo Place development in Quarry Bay declined 3 percentage points each from a year earlier to 94 percent and 90 percent, respectively. Rent from leases signed during the period, including renewals, tumbled 14 percent at Pacific Place and 15 percent at Taikoo Place for the first half, according to a separate statement.

Swire’s two newest Hong Kong buildings, Two Taikoo Place and Six Pacific Place (formerly 46-56 Queen’s Road East), were 68 percent and 56 percent leased, respectively. Excluding the pair, the rest of the office portfolio was 91 percent occupied, down from 93 percent a year earlier.

The company achieved HK$2.6 billion in total attributable gross rental income from its office properties in Hong Kong during the period, down 4.8 percent from a year earlier.

With CBRE reporting grade A office vacancy of 17.4 percent citywide at the end of June, Swire said its office portfolio remained “resilient” amid a subdued market, benefiting from a “flight-to-quality” trend.

“We think that the office stock that we have is very well positioned to benefit from a recovery in demand when that demand does start to recover,” Bradley told analysts on an earnings call.

Miami Disposals

With the Hong Kong market suffering, Swire has found opportunities for revenue from selling down its US holdings, selling three Miami assets in recent months.

In May, Swire sold a 2.83-acre parcel at 700-799 Brickell Ave in downtown Miami, where it once planned to build a office tower, to local multifamily developer Melo Group for $211.5 million. 

Less than one month later, the company sold its 75 percent stake in the Brickell City Centre mall along with its interest in the parking element of the project, to its existing partner, Simon Property Group, for $548.7 million.

The property sales have continued in recent weeks, with Swire earlier this month disposing of a a site adjacent to Brickell City Centre to Dubai-based Kerzner International, the parent firm of the high-end Atlantis Resorts chain, for $45 million.

Swire plans to put some of the funds raised from the disposals into its two-tower development at the Brickell Key island, where the group is building a new Mandarin Oriental hotel and luxury condos, Bradley said.

Swire expects the external environment to “remain challenging” in the second half of this year,  singling out its Hong Kong and mainland China office portfolios as segments facing market pressure. The company anticipates that its China retail portfolio will see brighter days as the market gradually gains pace in the remaining months of 2025.

New CFO Appointment

On the same day that it released its first half results, Swire Properties announced that Fanny Lung Ngan-yee, who has been the company’s chief financial officer since 2017, intends to retire in May next year.

Roy George Shearer, currently group director of finance at sister company Hong Kong Aircraft Engineering Company (HAECO), will take over as the developer’s CFO upon Lung’s retirement. 

Shearer joined the Swire Group in 2015 and previously held senior financial positions in the group’s shipping and marine services divisions in Singapore and the UK before he being appointed to his current role in 2021. Prior to joining Swire Group, Shearer held finance roles in the oil and gas industry in the UK, the Netherlands, and the United Arab Emirates.