Point of View | Mainland Retail Rents Growth 2%; Swire Properties Near Completion of HK$50 Billion Investment

Opinion Web The market remains cool, but Swire Properties has delivered a report that still reassures investors.

On March 12, Swire Properties announced its full-year 2025 financial results and held an earnings briefing. Just a few weeks earlier, in early February, the company had already disclosed operational data for its projects for the entire year.

The data shows that Hong Kong’s office market was cold last year but warmed up later. Swire Properties’ core office properties maintained stable occupancy rates, but rents continued to decline; meanwhile, retail properties experienced a full recovery, especially the flagship project in mainland China, Shanghai Industrial Taikoo Hui, which saw nearly a 50% surge in Louis Vuitton sales.

Therefore, the latest performance data from Swire Properties largely continues these trends.

Slight Decline in Rent Revenue

Data shows that Swire Properties achieved HKD 16.041 billion in revenue during the period, an 11% increase year-over-year; attributable to HKD 8.62 billion in basic profit attributable to shareholders, a 27% increase, reversing last year’s double decline in revenue and profit.

Notably, the growth in profit attributable to shareholders mainly came from the sale of non-core assets.

Since 2018, Swire Properties has been steadily advancing its strategy of “disposal of non-core assets + capital circulation.” By 2025, the company had completed the disposal of non-core assets including the Brickell City Centre shopping mall and two adjacent land plots in Miami, as well as the Cheung Tsing Factory Building and 43rd floor of the Island East Centre in Hong Kong. Among these, the Miami assets alone generated a pre-tax return of approximately HKD 871 million.

Excluding the profits from asset sales, the recurring basic profit attributable to shareholders was HKD 6.26 billion, down 3% year-over-year. The decline was mainly due to rental income loss after the Miami assets were sold. Additionally, Hong Kong office rent income decreased, and increased expenses for residential sales and marketing also impacted results.

Offsetting these declines was the steady performance of retail properties in mainland China.

Data shows that, by business segment, the HKD 16.041 billion revenue in 2025 included HKD 917 million from the hotel segment, up 3.3%; and the property trading segment, which saw a nearly 23-fold increase to HKD 2.11 billion, thanks to the launch of its first residential project in mainland China, “Shanghai Lujiazui Taikoo Yuan,” last year.

As for the property investment and rental income segment, Swire Properties recorded HKD 13.014 billion, down 3.3% from 2024’s HKD 13.452 billion; during the same period, operating profit from property investments was HKD 7.712 billion, a 6.5% decrease.

It’s hard to pinpoint who dragged the performance down. In 2025, office rent income was HKD 5.248 billion, down 4.4%; retail rent income was HKD 7.193 billion, down 2.6%; and residential rent income was HKD 438 million, also slightly lower.

If one must pick a drag, it would be office buildings. During the period, the fair value loss of Swire Properties’ investment properties increased from HKD 6.299 billion to HKD 7.716 billion, mainly due to the Hong Kong office portfolio.

Regionally, Swire Properties’ Hong Kong office portfolio’s annual rental income totaled HKD 4.885 billion, down 4% year-over-year.

The main reason is the high vacancy rate and ongoing new supply in Hong Kong’s overall office market, which put downward pressure on rents. Although active IPO markets and improved financial sector sentiment began to boost leasing demand in Q4, the impact on performance was limited.

However, high-quality office buildings under Swire Properties still demonstrated resilience. Swire owns two office clusters in Admiralty and Quarry Bay—Swire Grand and Taikoo Place—that attracted new tenants and retained existing ones through renewals and expansions.

As of year-end, the overall occupancy rate of Swire’s office portfolio was 89%. Excluding the newer buildings—Taikoo Place Tower 2 (73%) and Taikoo Place Tower 6 (66%)—the core mature properties had a 91% occupancy rate. Moreover, only 7.6% of leases are due for renewal in 2026.

On the other hand, Hong Kong retail properties achieved total rent income of HKD 2.355 billion in 2025, roughly unchanged from 2024.

Three wholly owned flagship malls—Swire Grand Shopping Mall, Cityplaza, and Citygate Outlets—saw retail sales increase by 6%, 3%, and 2%, respectively, while Hong Kong’s overall retail sales were estimated to have risen by only 1%. All three properties maintained a very high occupancy rate of 100% at year-end, with about 20% of leases expiring in 2026.

Despite challenges in the Hong Kong office market, Swire’s retail business in Hong Kong showed better-than-market stability.

HKD 46 Billion Invested in Mainland China

In mainland China, Swire Properties’ mainland office rental income declined 3% to HKD 818 million, including HKD 363 million from Guangzhou Taikoo Hui, which fell 3% during the period.

However, occupancy rates for these office properties remained relatively stable: Guangzhou Taikoo Hui at 90%, Beijing Yintai Port at 93%, and Shanghai Industrial Taikoo Hui at 93%.

The key retail business in mainland China saw a 2% increase in attributable rent income to HKD 5.353 billion in 2025. The three malls under control had a combined rent income of HKD 4.628 billion, up 3% year-over-year.

Specifically, retail sales and rent income at Sanlitun Taikoo Li in Beijing increased by 11% and 3%, respectively. The project recently announced a major milestone in its upgrade.

Data shows that the strategic upgrade of Sanlitun Taikoo Li officially started in 2022. To date, nearly half of the northern commercial space has been renovated and brand lineup optimized, with flagship stores for Dior, Hermès, Louis Vuitton, Tiffany & Co., Loro Piana, and others opening successively, including China’s first Dior Maison and Beijing’s second Louis Vuitton Maison.

The southern and western zones have also been optimized. The southern zone focuses on trend upgrades, introducing Beijing or national first stores for brands like TOTEME, HELLY HANSEN, and KNOTIFY. The western zone, as an extension of the south, introduced Nike’s first ACG flagship “ACG Base Camp” and Descente DKL global experience center last year.

Recently, Nike’s first ACG flagship “ACG Base Camp” also opened in Sanlitun Taikoo Li.

Currently, the northern part of Sanlitun Taikoo Li’s North N1 building (formerly Yushe Hotel) is being redeveloped for retail use. The project was topped out in November 2025 and is expected to open in 2027.

Chengdu Taikoo Li maintained steady growth, with retail sales and rent income increasing by 7% and 5%, respectively.

In 2025, the project completed the introduction and upgrade of 59 brands and stores, including Audemars Piguet, Descente, Descente Blanc, Golden Goose, Gregory, Laderach, LINDBERG, Muji flagship store, On Running flagship, Salomon flagship, and others.

Guangzhou Taikoo Hui reversed its downward trend in 2025, with retail sales and rent income both rising 2%.

In 2025, the mall introduced brands such as Acne Studios, Alexander Wang, Galenic, Guerlain, Helena Rubinstein, Jil Sander, Kenzo Kids, Colonne, Marni, MIKI HOUSE, Pomellato, Xingyao·Shishi Jiu, Yushang You Song, and Tom Ford.

A major future growth point is the “Huifang” project, with a construction area of 8,400 square meters, currently called Taikoo Hui Phase II, scheduled for completion in 2026. The third phase, the former cultural center with 60,800 square meters, is expected to be completed by late 2027.

Among all properties, Shanghai Industrial Taikoo Hui showed the best growth. Thanks to the popularity and foot traffic generated by the 2025 LV landmark “Louis No. 1,” the project achieved a 49.6% sales increase, the highest among all projects. Rents also grew by 1%.

In 2024, due to upgrades, Industrial Taikoo Hui faced long-term vacancies, but these have now been filled with popular brands. For example, in October 2025, the US sports fashion brand Sporty & Rich opened its first boutique in China here.

With hardware upgrades, Industrial Taikoo Hui continues to enhance its brand lineup. In 2025 and early 2026, brands such as Ferragamo, Singapore’s BEYOND THE VINES (first store in China), designer fashion brand GAR?ON BY GAR?ON (first offline store), UK high-end bicycle brand FACTOR (first store in China), Swedish sportswear brand CRAFT (first store in China), and the global flagship of Ann Andelman Café opened here.

Due to the “Taikoo Fong” project construction, Beijing Yintai Port saw a 3% increase in retail sales and a 2% decrease in rent income.

In Shanghai’s non-core area, the former Bund Taikoo Li made great efforts last year, opening over seventy new stores including Aesop, Balmain, I.T Blue Block & Beams, Lancôme, M Essential, Max Mara, Prada Beauty, Rolex, Sporty & Rich, and TASAKI.

Despite a 7% growth in retail sales, rents declined 2% due to adjustments and overall market conditions.

Investors attending the meeting shared that management is optimistic about the upcoming mainland China retail market.

“With the upgrade of many tenant portfolios, we’ve seen this positive momentum and accelerated growth continue into the first quarter of this year.” Using Sanlitun Taikoo Li as an example, the project opened many luxury flagship stores last December. “The performance in the first two months of this year has been very encouraging. We’ve seen double-digit retail growth, and we expect this trend to continue into the second quarter.”

Management also stated that foot traffic in all Swire malls remains very strong. “In all the cities we operate in, our performance outperforms the market… Luxury brands perform very well in our malls… At the same time, we see some emerging domestic brands performing exceptionally well.”

Management pointed out that domestic brands complement international and luxury brands well.

Overall, Swire Properties continued to demonstrate resilience and strategic focus in 2025. Mainland China retail was a bright spot.

Swire Properties’ management said at the earnings briefing that the company had previously committed HKD 50 billion of investment in mainland China and has now deployed HKD 46 billion. Most projects are already underway.

According to statistics, in 2026, Swire Properties will unveil several projects including Beijing Taikoo Fong, Sanya Taikoo Li, Shanghai Qiantan integrated development, and Shanghai Lujiazui Taikoo Yuan.

Disclaimer: The content and data in this article are compiled by Opinion based on publicly available information and do not constitute investment advice. Please verify before use.