Hong Kong’s Swire Properties zeroes in on Shenzhen as part of its US$12.7 billion, 10-year investment plan
- Swire plans to bring its Taikoo Li and Taikoo Hui mixed-use projects, which have been successful in other mainland Chinese cities, to Shenzhen
- The Hong Kong-listed firm recently signed a cooperation agreement with the Futian district government of Shenzhen to develop a retail-led commercial project
“The challenge for us is continuing the Greater Bay [Area] story which, at the moment, is Shenzhen. That is where we want to be able to bring a Taikoo Li or a Taikoo Hui concept,” said Blackburn.
Taikoo Li and Taikoo Hui are Swire’s mixed-use property projects in China. On the mainland, the company has such developments in Beijing, Shanghai, Guangzhou and Chengdu.
Swire’s HK$100 billion investment plan unveiled in March is broadly divided into three main components. About HK$30 billion has been earmarked for reinforcing office developments, HK$20 billion for residential projects in Hong Kong and Southeast Asia, and HK$50 billion for Taikoo Li and Taikoo Hui projects in China’s tier one cities, specifically in the Greater Bay Area.
He added that the company would like to build on the success of its Taikoo Hui project in Guangzhou, which “has been our flagship for more than a decade”.
While the scope of the Shenzhen project “will be entirely determined by the size of the site and the planning parameters”, Swire’s “retail projects are generally between one and 1.5 million square feet”, Blackburn said.
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Swire recently signed a cooperation agreement with the Futian district government of Shenzhen. The company will work closely with the local authorities to develop a new commercial project and introduce premium international retail brands with a focus on culture and the arts to support the district in lifting its profile.
“The Futian district government is keen to take advantage of our extensive experience and expertise in urban regeneration, as well as our creative approach to placemaking” to transform neighbourhoods, Swire said in a statement.
Swire has a clear understanding of what the government is looking for, Blackburn said. Swire has had a team in Shenzhen since 2019 scouring for sites, but has yet to zero in on a location.
“To choose one site, we probably look at 100. That is how you know how complex the process is, in order to meet all our criteria,” Blackburn said.
Generally, the development period from acquisition to completion is between four to five years, depending on the scale, he added.
Swire’s focus in Shenzhen will be retail-led and is unlikely to include an office component. The city has ample supply of grade A office space, which has pushed up the vacancy rate to 15.5 per cent in the second quarter, according to Knight Frank.
“In short term, the issue of oversupply exists, the liquidity/lettable rate of the stock will be slower compared to last year, the vacancy rate will be pushed up and the rent is likely to remain flat,” the property consultancy said in its Shenzhen office market report.
“We have very clear ideas on where we want to invest and how much we want to invest in each of those projects,” Blackburn said, adding that that the project in Shenzhen would most likely be a joint venture.
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Last week, Chinese Premier Li Keqiang sounded another warning about China’s economy at a State Council meeting, saying companies were “facing more difficulties than in 2020” – during the initial outbreak of the coronavirus – and called for more reform.
Blackburn said Swire was comfortable investing in the Chinese mainland, pointing to the group’s 150-plus year history in the country.
“Will we continue our investment decisions in the Chinese mainland? The short answer is yes,” he said. “Irrespective of the short-term volatility, during this period of Covid, we still see the fundamentals.”
