Swire Properties Reports $196M 2025 Loss on Falling Office Values

Swire Properties reported an attributable loss of HK$1.53 billion ($196 million) for 2025, doubling from a year-earlier loss of HK$766 million, as property writedowns on its home city’s office market overshadowed a mainland China retail business that now generates more rental income than the Hong Kong offices that built the company’s reputation.

Fair value losses on investment properties reached HK$7.75 billion for the year, with HK$6.86 billion — roughly 88 percent — concentrated in Hong Kong, according to the results filing. The attributable loss was Swire’s second in as many years. 

Underlying profit, which strips out property revaluations, rose 27 percent to HK$8.62 billion, driven largely by proceeds from the sale of Swire’s interests in the Brickell City Centre complex to Simon Property Group for $512 million. Recurring underlying profit, which excludes one-off disposals and reflects the underlying rental business, fell 3 percent to HK$6.26 billion.

“Despite the loss of rental income from Brickell City Centre after disposal and lower office rental income in Hong Kong, we achieved a recurring underlying profit of HK$6.3 billion, a testament to the resilience of the office portfolio and the positive momentum in the retail portfolios in Hong Kong and in the Chinese Mainland,” Blackburn said.

Mainland Overtakes Home City

The company’s mainland China properties recorded a comparatively modest HK$896 million in fair value losses with valuations in its mainland retail portfolio rising 9 percent, chief executive Tim Blackburn told analysts on a Thursday earnings call, with the stronger outside of Hong Kong marking a shift in the company’s business.

Blackburn confirmed on the call that rental income from Swire’s mainland China retail portfolio now exceeds that from its Hong Kong office portfolio — a milestone that would have been difficult to foresee a decade ago for a developer whose identity has long been bound up with its Taikoo Place and Pacific Place complexes in Hong Kong.

The combined mainland China portfolio accounted for 43 percent of Swire Properties’ attributable gross rental income in 2025.

That shift can be linked to a HK$100 billion investment plan announced in 2022, under which more than half the capital — roughly HK$50 billion — targeted mainland retail-led mixed-use projects. With 67 percent of the plan now committed and the majority of the mainland China allocation already deployed, according to the company, the income shift is beginning to show in the numbers.

Swire’s mainland retail sales rose 7 percent year-on-year on an attributable basis in 2025, and exceeded 2019 levels by 65 percent on a like-for-like basis.

HKRI Taikoo Hui in Shanghai recorded a 49.6 percent surge in retail sales, helped by the June opening of Louis Vuitton’s ship-shaped “The Louis” flagship store on Nanjing East Road.

Sales at Taikoo Li Sanlitun in Beijing grew 11.2 percent after Swire repositioned its North Block with a series of global luxury flagship openings. Occupancy across the company’s mainland malls ranged from 96 percent to 100 percent at year-end.

Taikoo Li Julong Wan in Guangzhou, which Blackburn described as the first new retail-led centre to open under the company’s HK$100 billion investment plan, opened first phase in December 2025.

Attributable gross rental income from mainland China retail reached HK$5.4 billion, up 2 percent year-on-year, the company said.

“Over the medium term, we anticipate an increasing contribution from our Chinese Mainland portfolios as we bring some exciting new projects online,” Blackburn said.

Hong Kong Office Drags

In its Hong Kong home market Swire’s attributable gross rental income fell 5 percent to HK$5.2 billion, weighed down by high vacancy, new supply and continued negative rental reversions.

While agency data has shown signs of a Hong Kong office market recovery since late last year, that rebound remains concentrated in the core business district of Central. 

While Swire’s Pacific Place complex in Admiralty saw occupancy edge up one percentage point to 96 percent, rent on leases signed during the fourth quarter, including renewals, still fell 13 percent compared to a year earlier.

Swire’s Taikoo Place complex in Quarry Bay, in Hong Kong’s eastern corridor where JLL data shows vacancy at 12.8 percent, faced a tougher market. Occupancy across the company’s prime One Island East and One Taikoo Place towers fell from 94 percent at 31 December 2024 to 91 percent at the end of last year, while rental reversions were at -14 percent in the fourth quarter, compared to a year earlier.

In Swire’s older Taikoo Place offices vacancy declined to 88 percent at the end of 2025 from 91 percent a year earlier, despite negative rental reversions of 15 percent in the fourth quarter.

Swire’s Six Pacific Place — the recently completed tower formerly known as the 46–56 Queen’s Road East development — was 66 percent leased. Rent from leases signed at Taikoo Place fell 15 percent in the last three months of the year.

“Overall, negative rental reversions are narrowing while rental levels are stabilising in Central. They continue to reflect the prevailing soft market environment. Our strategy will be to continue to focus on tenant retention given the current market outlook,” Blackburn said.

Fair value losses of HK$6.86 billion — the bulk of the total — were concentrated in the Hong Kong investment property portfolio, reflecting continued cap rate pressure and weak rental income, according to the results announcement.

Hong Kong Retail Holds; Recovery Expected

Swire’s Hong Kong retail portfolio reported HK$2.5 billion in attributable gross rental income, which was flat against 2024.

Occupancy held at 100 percent across Pacific Place, Cityplaza and Citygate Outlets. Blackburn confirmed on the call that Pacific Place and Citygate Outlets are now recording positive rental reversions, with Cityplaza in Quarry Bay lagging slightly.

Swire competitor Hongkong Land, whose portfolio is concentrated in core Central, reported a profit attributable to shareholders of $1.26 billion for 2025, compared with a loss of $1.38 billion a year earlier, according to results released last week.

Revenue fell 27.7 percent year-on-year to HK$1.45 billion.

“Both Hongkong Land’s and Swire’s earnings reflected a soft Hong Kong office market in 2025. That said, there are early signs of demand recovery since late 2025, driven by active IPO activities in Hong Kong, particularly for top-tier assets in core Central,” Kathy Chan, equity analyst at Morningstar, told Mingtiandi.

“We expect a more meaningful pick-up in office rents from 2027 when vacancy levels further tighten,” Chan said.