Swire Properties upbeat about consumer spending in China’s first-tier cities
Swire Properties, one of Hong Kong’s oldest and largest builders of luxury homes and grade A offices, said it would continue to focus on first-tier cities in mainland China as it moves closer to sealing a deal for a new commercial project in Shanghai.
Guy Bradley, chief executive of Swire Properties, said Chinese consumers’ rising demand in the last two years has generated a positive growth rate for the company’s existing projects and bolstered its confidence in expanding in the mainland market.
“Our focus will be on the first-tier cities,” he told the South China Morning Post. “I believe it is the right place for Swire Properties to be focused.”
Swire is the latest developer to express confidence in the mainland’s commercial property sector which is facing concerns about oversupply due to challenges brought about by the country’s thriving e-commerce sector.
Bradley added that Swire hopes to secure its sixth project – a retail shopping complex at Qiantan, Shanghai soon.
The value of the Hong Kong developer’s existing developments on the mainland, including two in Beijing and three in the cities of Shanghai, Guangzhou and Chengdu, is HK$45 billion (US$5.77 billion).
HKRI Taikoo Hui, a 17 billion yuan mixed-use development on Shanghai’s Nanjing Road West, was officially launched on Friday.
The project, encompassing two grade A office towers, two luxury hotels and a shopping centre, is a 50-50 venture between Swire Properties and HKR International. It covers an area of about 63,000 square metres and has a gross floor area of 322,000 square metres.
“We are in the business of competing,” Bradley said. “We made a very conscious decision to position this product as a mall to provide a broad answer to what we think Shanghainese consumers want.”
Nanjing Road West is one of the busiest shopping streets in downtown Shanghai. Other developments on the road include the mixed-use Jing An Kerry Centre, covering 450,000 square metres.
HKRI Taikoo Hui tenants include Disney, Starbucks and Hong Kong retail chain operator City’super.
The office towers currently report an occupancy ratio of 80 per cent.
John Slosar, chairman of Swire Properties, said the company was confident that the project “will have a transformational effect on Shanghai’s lifestyle scene”.
In July 2015, Swire Properties signed a framework agreement with a subsidiary of state-owned developer Shanghai Lujiazui Group to build a 124,000-square-metre retail project at Qiantan, an emerging business district near the site of 2010 World Expo. Swire said its expects to formerly complete the deal soon.
Mainland Chinese commercial property developers are facing an uphill battle in reducing their excess stock as more young shoppers use online e-commerce platforms to buy consumer goods from daily necessities to home appliances.
However Wu Ruiling, a deputy general secretary of the China Chain Store and Franchise Association, said top-quality shopping centres are still in high demand in some lower-tier cities.
Last week, Future Land Development, one of the mainland’s top 15 developers, said it plans to boost the number of shopping centres in its portfolio five-fold to 100 over the next three years.