Swire Properties Underlying Profit Falls 9% as Regional Investment Plan Barrels Ahead

Swire Properties posted a 9 percent decline in its full-year underlying profit, primarily due to a reduction in income from the sale of car parking spaces at the Hong Kong-based developer’s Taikoo Shing residential project in Quarry Bay.

Underlying profit attributable to shareholders fell by HK$826 million year-on-year to HK$8.7 billion (now $1.1 billion) in 2022, the real estate arm of trading group Swire Pacific said Thursday in a filing with the Hong Kong stock exchange.

The company’s recurring underlying profit, which adjusts for one-off credits and charges including gains on the sale of properties, was essentially flat at nearly HK$7.2 billion for the whole year. Revenue tumbled 15 percent to HK$13.8 billion, but Swire Properties chairman Guy Bradley chose to highlight the progress of the developer’s regional expansion.

“Following the announcement of our HK$100 billion investment plan, our teams have made tremendous progress implementing our plan,” Bradley said, noting that 39 percent of the amount has been committed to new and ongoing investments in Hong Kong and across core markets in mainland China and Southeast Asia.

Expansion Headway

Under the investment plan, Swire Properties has allocated HK$30 billion to its portfolios in Hong Kong to further expand the Taikoo Place and Pacific Place complexes. In mainland China, meanwhile, the developer has earmarked HK$50 billion to double gross floor area in the region over the next 10 years under the Taikoo Li and Taikoo Hui brands.

Last March, Swire Properties announced a fourth addition to its Taikoo Li commercial projects on the mainland, having formed a joint venture to acquire a high-end retail site in the second-tier city of Xi’an through a government land sale for RMB 2.57 billion ($407.4 million). Then in October, the company partnered with a state-owned firm to develop a resort-style retail complex in Hainan province.

December saw Swire Properties take full ownership of Sino‐Ocean Taikoo Li Chengdu via a buyout of Sino-Ocean Group’s interest in the 50:50 mall JV for RMB 5.55 billion ($800 million).

In Hong Kong, the developer bested 20 competing bids at a June tender to secure a residential site in the city’s Wan Chai area for HK$1.96 billion ($249.9 million). Towards the end of the year, Swire Properties extended its Pacific Place portfolio eastward from Admiralty into Wan Chai district by renaming a 24-storey office tower on Queen’s Road East as Six Pacific Place.

Southeast Asia Developments

As part of its regionwide push, Swire Properties aims to build its presence in four core Southeast Asian cities: Singapore, Bangkok, Jakarta and Ho Chi Minh City.

The developer took a bold step in February of this year with the purchase of a 40 percent interest in a residential development site in central Bangkok for THB 2.4 billion ($73 million).

The acquisition on Wireless Road in the prime Lumphini subdistrict marked Swire Properties’ first real estate investment in the Thai capital. The seller of the stake was fellow Hong Kong property major HKR International, chaired by Victor Cha.

Swire Properties also has two projects currently in sale and development in Ho Chi Minh City and a luxury residential project launched for sale in Jakarta, Bradley said.