Source: Investment & Real Estate
2023 is a year full of challenges and opportunities for the Chinese mainland real estate market, and Hong Kong-funded enterprises can also be said to have different performance in the mainland.
In this article, we will review the performance of Hong Kong companies such as Hong Kong Properties, Swire Properties, New World Development, Hang Lung Properties, Sun Hung Kai Properties, Wharf and other Hong Kong companies in mainland China in 2023, as well as their upcoming projects this year. (The real estate companies in the article appear in the order of the first letter of the company's name, and are not ranked)
In terms of performance, Wharf and Hang Lung's group performance is more reliant on mainland properties, with 74% of Wharf Group's revenue coming from mainland property portfolios, compared to 67.5% for Hang Lung.
In terms of performance growth in mainland China, Swire Group led Hong Kong with a 38% increase, while New World, Wharf and Hang Lung all achieved slight growth.
In 2024, New World Group will usher in the concentration of new projects, with 20 K11 projects opening in the Mainland and Hong Kong, and it is expected that by FY2026, K11 will be completed in 12 key cities in the Greater China region, with a total of 38 projects.
1
Wharf Group
Chinese mainland performance
For the full year of 2023, Wharf Group's total revenue increased by 5% to HK$18.95 billion and operating profit increased by 4% to HK$6.896 billion.
Revenue from the Mainland amounted to HK$14.03 billion and operating profit was HK$4,232 million, while revenue from Hong Kong was HK$4,717 million and operating profit was HK$2,455 million.
At the end of the period, the Group's total operating assets in the Mainland amounted to HK$89,078 million and in Hong Kong amounted to HK$94,868 million.
In terms of development properties, in view of market fluctuations, the Group did not replenish the land after the last purchase of land in 2019, and the land bank further decreased to 1.4 million square meters.
In terms of investment properties, revenue edged down 1% to HK$4,843 million and operating profit edged down 1% to HK$3,207 million. In RMB terms, income from investment properties in the Mainland increased by 4% and operating profit increased by 2%. Retail properties are slowly recovering; Occupancy rates and rents both fell in the face of fierce competition from oversupply and weak demand.
In terms of hotels, the Group's hotel performance in the Mainland rebounded steadily, but it lost momentum towards the end of the year. Revenue increased by 66% to HK$611 million, recovering from an operating loss to a profit of HK$107 million. The group launched the high-end fashion lifestyle brand "Marke" in Changsha IFS.
Retail projects in the Mainland
According to the official website of Wharf Group, at present, Wharf holds 11 investment properties in the mainland, including multi-purpose IFC series, Shanghai investment property, Times Square, Times Outlet series and other business formats.
Among them, there are 9 retail properties including Chengdu IFS, Changsha IFS and Dalian Times Square, most of which are mature high-end shopping malls. The Group's retail portfolio in the Mainland did not grow last year.
2
Hang Lung Properties
Chinese mainland performance
The Group's total revenue for the full year of 2023 was HK$10,316 million, and overall operating profit increased by 2% to HK$7,389 million. Among them, the Group's total revenue from the Mainland increased by 3% to HK$6,967 million, and the total revenue from Hong Kong increased by 2% to HK$3,349 million.
The mainland market rebounded at the beginning of the year, with the Group's shopping malls recovering from the impact of the pandemic in 2022, with annual leasing revenue up 8% and overall tenant sales up 23%. The premium office portfolio maintained solid growth, with revenue up 5%; Hotel operations recovered significantly, with revenue up 90% year-on-year.
Among them, the revenue of high-end shopping malls in the shopping mall portfolio was 4.338 billion yuan, an increase of 9% year-on-year, except for Shenyang Municipal Government Hang Lung Plaza, which faced fierce market competition, the rest of the high-end shopping malls recorded an increase of 6% to 19%; The revenue of sub-high-end shopping malls was 625 million yuan, the same as in 2022, and the revenue continued to increase as the occupancy rate improved.
It is worth mentioning that shopping malls such as "Dalian Hang Lung Plaza, Wuxi Hang Lung Plaza, Kunming Hang Lung Plaza" and other shopping malls that have completed or are in the process of asset optimization or brand upgrading have all achieved excellent performance.
Total office revenue increased by 5% from 2022 to RMB1,161 million, mainly due to the solid performance of Hang Lung Plaza in Shanghai and the business growth of the newer Kunming and Wuhan office buildings.
Projects to be launched in the Mainland
Hangzhou Henglong Plaza
Hangzhou Henglong Plaza is located in Baijingfang, Gongshu District, adjacent to the Hangzhou Center, which will open at the end of 2023, and in the Wulin business district in the center of the city, with an investment of 19 billion yuan and a total construction area of 368,000 square meters, including 1 shopping mall, 5 Grade A office buildings and the Mandarin Oriental Hangzhou Hotel, which is expected to be completed and opened in phases between 2024 and 2025.
Inspired by the local landscape elements, the project will be built into a high-end international business center integrating landscape, history and humanity, and will become a new generation of urban landmarks.
Future outlook
In a letter to shareholders, Ronnie C. Chan, chairman of Hang Lung Properties, said that 2023 was a record year, with more commercial leasing revenue in mainland China than in any previous year, despite no new floor area.
Looking ahead, it will be a challenge to achieve another great result in 2024, but the company will do its best to operate in a very weak economy. The Company remains looking forward to the completion of a number of projects, including the opening of the Grand Hyatt Kunming Hotel and the phased completion of the award-winning mixed-use development Hangzhou Hang Lung Plaza, which are high-quality asset portfolios that are expected to contribute to the Company's continued growth.
3
Swire Properties
Chinese mainland performance
In 2023, the rental income of the Group's investment portfolio in Mainland China was HK$4,593 million, representing a year-on-year increase of 38%, reflecting the significant recovery of the post-pandemic market. Rental income from retail properties increased by 42% to HK$4,191 million, with rental income rising by 45% excluding the impact of rental support and RMB exchange rate fluctuations.
According to the financial report, these retail properties are mainly completed in phases between 2024 and 2028.
Projects to be launched in the Mainland
Swire Sanya International Duty Free City Phase 3 project
Jointly developed by China Duty Free and Swire Properties, Swire Sanya International Duty Free Mall Phase 3 is located north of Longhai Road and east of Tengqiao Road in Haitang District, with a total area of approximately 200,000 square metres.
The project is the first resort-style retail project developed by Swire Properties and one of the largest Taikoo Li projects in China, and will be developed into a new international cultural tourism and commercial landmark integrating high-end retail, waterfront cultural tourism elements and cutting-edge cultural and artistic scenes.
Taikoo Li Xi'an
With a total floor area of approximately 119,000 square metres and a total gross floor area of 256,000 square metres, Taikoo Li Xi'an includes retail malls, cultural facilities and luxury hotels, with a total investment of approximately RMB10 billion.
The project will integrate retail malls, cultural facilities and luxury hotels, further explore the industrial ecological clusters of "new commerce", "new creativity" and "new fashion", focus on awakening cultural memory, activating resource endowment, rejuvenating business style, promoting the perfect combination of traditional culture and modern civilization, and creating a new landmark of cultural tourism where history and modernity complement each other.
Taikoo Li Xi'an is expected to be completed in phases from 2026.
Future outlook
In the Mainland, the Group continued to expand its business footprint, mainly in core cities, such as the recent two major investments in Pudong, Shanghai, namely the "Qiantan Integrated Development" across the street from Taikoo Li Qiantan and the "Pidging Integrated Development" located on the banks of the Huangpu River, which has enabled the Group to have four large-scale development projects in Shanghai and set foot in the residential market in the Mainland for the first time.
As of March 8 this year, about HK$58 billion of the above-mentioned investment plans have been implemented, with HK$11 billion, HK$37 billion and HK$10 billion respectively invested in Hong Kong, the Mainland and residential projects. Among them, the key projects that have been implemented include a total of 4 residential projects in Hong Kong and Bangkok, and 6 commercial complexes or office buildings in Xi'an, Sanya, Shanghai and Hong Kong; The projects that have not yet been implemented include first-tier and new first-tier complexes in the mainland, including Guangzhou and Beijing.
"We currently operate six international projects in four major cities in mainland China, with five new large-scale projects under development. We aim to double the gross floor area in Chinese mainland by 2032. ”
4
Hongkong Land
Chinese mainland performance
During the reporting period, Hongkong Land's underlying profit attributable to shareholders was US$734 million, down 5% year-on-year. Of this amount, Chinese mainland accounted for US$201 million.
Projects to be launched in the Mainland
In terms of development business, the Group has 5.2 million square meters of properties under construction, including West Bund Financial City and the remaining nine luxury and high-end retail rental assets in Chinese mainland. According to the financial report, these retail properties are mainly completed in phases between 2024 and 2028.
Hongkong Land's layout in the mainland will accelerate significantly in 2024, with five commercial entities in East China and Southwest China respectively.
西岸金融城 STATION 1907启点
Five special scenes have been created here, including Platform 8, the stationmaster's hut, the Wuzhen vestibule, the Dream Garden and the Secret Trail.
Qidian 1907 retains the century-old railroad tracks, green bricks, station wall lights, wooden canopies, etc. It has become a new type of living area integrating catering, retail, entertainment and service. It's not just a new landmark for urban living, it's a new interpretation of the urban lifestyle.
Xinyao Halo Live Phase II
Xinyao Midtown is a large-scale mixed-use project located in Xuhui District, Shanghai, with a total construction area of about 650,000 square meters, which is a super urban complex integrating commercial, office, residential and cultural theater.
Xinyao Halo Live is positioned as a "new field for young and intelligent play", covering the "Guangli" tree-lined block, cultural landmark theater, characteristic sky corridor, lifestyle retail and sports-themed commerce. The project is not only located in the office park, but also linked to Xuhui's "Qiaogon Life Box", which will become a smart complex integrating multiple formats such as commerce, culture and art, sports and health.
Jinling Central
Nanjing Jinling Central is located in the core business district of Xinjiekou, Nanjing, close to the No. 1 subway station, covering an area of about 32,000 square meters, with a total construction area of about 313,000 square meters and a total investment of 10 billion yuan.
Nanjing Jinling Central will continue Hongkong Land's "Central" product line, and build a core landmark project in the city that integrates international super business, high-end boutique business, and top executive apartments. Construct the core landmark works of the city that integrate international super business, high-luxury boutique business, top executive apartments and other formats.
Qiyuan Light Lane
Located next to Jialing Park in Guanyinqiao, Chongqing, with a total construction area of 62,000 square meters (26,000 square meters of commercial block), Hongkong Land's halo commercial "Qiyuan Guangli" project is positioned as the most IN youth culture and high-quality social district, focusing on high-quality catering, trendy retail, service experience and other formats.
The design concept of Qiyuan Guangli is a "park-like block", aiming to create a high-quality living space that integrates multiple functions such as work, shopping, leisure, entertainment, business and social.
Halo Mall
Chengdu Halo is located in Jinjiang District, with a total volume of about 300,000 square meters, including office buildings, hotels, and commercial formats. It has a commercial area of 120,000 square meters and is Hongkong Land's first commercial project in Chengdu.
Chengdu Halo has introduced brand merchants such as Hema Fresh, Huanshi Cinema, Nerbao Family Center, Nantangguan, Music KTV, etc. In addition, the project has created a 4,000-square-meter floating crystal corridor, a 4,200-square-meter rooftop cloud garden, a 10,000-square-meter street garden and a sunken plaza.
Future outlook
In the future, Hongkong Land will successively settle a total of 17 properties in 10 cities, including Hong Kong, Macau, Chongqing, Beijing, Shanghai, Nanjing, Chengdu, Hangzhou, Suzhou and Wuhan. In addition, 10 additional projects are expected to be launched from 2024 to 2028, with a total estimated leasable area of 358,000 square meters.
5
Sun Hung Kai Properties
Chinese mainland performance
In the 2023/24 interim results, the Group's total revenue was HK$27,542 million, slightly higher than the same period last year. Of this amount, HK$3,141 million came from the Mainland.
The Group's land bank in the Mainland is 67.2 million square feet (over 6.24 million square meters), of which 20.9 million square feet (1.94 million square meters) are completed properties, the vast majority of which are large-scale composite properties located in the core commercial properties of major cities, which are reserved for leasing and long-term investment by the Group.
In the property investment business, the Group's total rental income in the Mainland increased by 16% year-on-year to RMB2,896 million, driven by an increase in rental income from retail properties.
Sun Hung Kai Properties is committed to expanding the boundaries of its business footprint in the Mainland through a dual-track strategy of independent and joint development. As Sun Hung Kai's first independently developed large-scale commercial project in mainland China, the Beijing APM project is located in the bustling Wangfujing Street, and the original new Dongan shopping mall has been carefully renovated to show the new look of "Beijing APM".
In the field of joint development, Sun Hung Kai has joined hands with well-known real estate developers such as China Resources Land, starting with the joint development of the Hangzhou MixC, and its cooperation network has been continuously expanded, covering R&F Properties, KWG, Wharf, Henderson Land and other industry leaders. This partnership has effectively accelerated Sun Hung Kai's commercial real estate business expansion in Chinese mainland.
In addition, Sun Hung Kai has always focused on the development of high-end shopping malls, and founded the IFC brand as early as 1998, and gradually deployed it in Shanghai, Nanjing, Hangzhou and other cities, further consolidating its position in the high-end commercial field.
Projects to be launched in the Mainland
Sun Hung Kai Properties' investment areas are mainly focused on the core areas of first- and second-tier cities in East and South China, and the properties are all well-located.
Nanjing IFC
Nanjing IFC is a large-scale commercial complex project located in Jianye District, Nanjing, located in the core area of central Hexi, close to Yuantong Metro Station, with superior geographical location and convenient transportation. Nanjing IFC is Sun Hung Kai Properties' third high-end commercial brand IFC shopping mall in China, following IFC in Hong Kong and IFC in Shanghai.
With a total construction area of more than 300,000 square meters, Nanjing IFC includes 2 Grade A office buildings, a shopping mall of nearly 100,000 square meters, and the fourth Andaz Hotel in Greater China. The mall has a total floor area of about 93,000 square meters and is divided into seven floors, of which the 4-7 floors are positioned as food and beverage areas. The mall is home to a number of top international brands, some of which are making their debut in Nanjing, providing a one-stop new shopping, entertainment and leisure experience.
Future outlook
Sun Hung Kai's mainland holdings are represented by IFC, which has always maintained excellent performance. In the next few years, new projects will be completed one after another, most of which will be developed using the more advantageous TOD model.
6
New World Development
Chinese mainland performance
According to the 2023/2024 interim results announcement, in the second half of 2023, NWD's total revenue was HK$17.066 billion, down 25% year-on-year. However, gross profit increased by 2% to HK$7,257 million, mainly due to higher gross margin property investment in the K11 project.
In the Mainland, New World has a focus on the core cities of the Guangdong-Hong Kong-Macao Greater Bay Area and the Yangtze River Delta region, including Guangzhou, Shenzhen, Foshan, Wuhan, Shanghai, Ningbo, Hangzhou, Beijing and Shenyang.
Mainland property investment revenue reached HK$929 million and segment results increased by 4% and 3% year-on-year to HK$454 million, respectively, with solid performance and high overall occupancy rates of major projects in the investment portfolio.
Projects to be launched in the Mainland
Starting in FY2024, there will be 20 K11 projects in Chinese mainland and Hong Kong, and this number is expected to increase to 38 by FY2026. This year alone, New World has projects such as "K11 ECOAST" in Shenzhen and "11 SKIES" in Hong Kong, and the "Kai Tak Retail Pavilion" in Hong Kong will also be completed in the second half of the year.
River Island HAN ZONE
Wuhan Hezhizhou HAN ZONE commercial block, independently operated by New World China, has a commercial volume of about 40,000 square meters, and is expected to open this year. The project is built on the river, with three main streets and three atriums intertwined, supplemented by green parks, to create a beautiful scene that complements the word "continent".
The commercial district of River Island is carefully divided into five theme blocks: "Continent of Nature", "Continent of Inspiration", "Continent of Romance", "Continent of Fireworks" and "Continent of Sleeplessness", each of which has its own unique characteristics, focusing on five major business groups: "Dynamic Outdoor", "Art and Cultural Curation", "Immersive Social", "Neighborhood Life" and "Night Entertainment and Gathering". It is committed to introducing special spaces such as "Art and Cultural Curation", "Food and Drink" and "Music Nightlife", and using these spaces as carriers to hold art and cultural activities such as curatorials, salons, and performances.
宁波新世界THE PARK by K11 Select
The design concept and format planning of THE PARK by K11 Select reflect the company's deep understanding of market demand and forward-looking grasp of future business trends.
The commercial part of the project includes about 100,000 square meters of art shopping center, about 42,000 square meters of characteristic cultural blocks, and about 20,000 square meters of central art park, building a characteristic structure of "mall + park + block".
The project plans six major business sectors, including international fashion and luxury combinations, cutting-edge inspired art, fashion and consumption, trendy and personalized experience, Sleepless Sky Street and Hong Kong and Guangdong characteristic consumption, so as to meet the needs of different consumers.
In addition, the project introduces the PARK-like trendy lifestyle and fully integrates the art, humanities and natural characteristics of Ningbo for the overall design, creating an international life scene integrating world flavor, art and cultural creativity, life aesthetics, and sports and trendy toys.
深圳K11 ECOAST
K11 ECOAST is a commercial project jointly invested by New World Development Company Limited and China Merchants Shekou in Shenzhen with a total investment of 10 billion yuan, and it is also the first flagship project of the K11 brand in Chinese mainland.
Scheduled to open at the end of 2024, the project is located in the Taiziwan area of Nanshan District, Shenzhen, with a total construction area of 228,500 square meters, including the K11 Art Mall, the K11 HACC multi-purpose art exhibition space, the K11 ATELIER office building and the Promenade promenade.
The name K11 ECOAST is inspired by a deep respect for green development and waterfront resources. The project is committed to promoting a sustainable and circular lifestyle, integrating green concepts into the design and development of this waterfront commercial complex through the power of creativity, culture and innovation.
Future outlook
At the results conference, the management of New World Development revealed that 20 K11 projects will open in the mainland and Hong Kong starting from FY2024, and it is expected that by FY2026, K11 will be completed in 12 key cities in Greater China, with a total of 38 projects with a total GFA of 2.97 million square meters, providing growth momentum for the performance.
"During the financial year 2023 to 2027, K11 rental income is expected to grow at a compound growth rate of approximately 30%. With the commencement of large-scale projects such as the Kai Tak Sports Park, the Group's recurring revenue will gradually increase to 50% of total revenue. ”
At the results conference, the management expressed optimism about the outlook for the mainland property market and believed that the property market would gradually stabilize and achieve stable volume and price increases. NWD intends to raise its full-year sales target for non-core assets from HK$6 billion to HK$8 billion.