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HKRI, Swire Properties team up for mega project
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HONG Kong developers have had a major hand in reshaping the skyline of Shanghai, and among the newer projects is a joint venture development between HKR International and Swire Properties on Nanjing Road W.
The 50-50 partnership, called HKRI Taikoo Hui, joins an illustrious list of Hong Kong companies that have built major commercial projects on Huaihai Road M., Nanjing Road W. and Little Lujiazui, including office towers and fancy retail malls.
The names Shui On Land, Sung Hung Kai Properties, Kerry Properties, Wharf Holdings, Hang Lung Properties and Cheung Kong are no strangers to Shanghai residents.
Shui On Plaza, Westgate Mall, Hang Lung Plaza, Wheelock Square, IFC and Jing An Kerry Centre, among other projects, stand as testaments to the investment commitment and design imagination of prime Hong Kong developers.
Hong Kong companies have invested in about 3 million square meters of high-end commercial properties across the city, with a comparable volume of projects in the pipeline.
The success of the Hong Kong entrepreneurs is attributable, in part, to their sharing the same culture and language with the mainland, according to Albert Lau, chief executive officer of Savills China, an international real estate services broker and a Hong Kong native himself.
The HKRI-Swire Properties venture is investing 17 billion yuan (US$2.58 billion) in the HKRI Taikoo Hui mixed-use development on Nanjing Road W.
The first phase of the 322,000-square-meter development will open before the end of the year. It will be accessible via Metro Line 13, with lines 2 and 12 only a few minutes’ walking distance away.
The project will comprise two Grade-A office towers, a high-end shopping mall, and three boutique hotels and serviced apartments.
The mall, scheduled to open in the first half of 2017, will range across designer fashion and accessories, beauty products, a bookstore, a supermarket and a yoga center. It will also have over 40 food and beverage outlets.
A century-old European-style mansion on the site will be preserved, renovated and renamed Cha House in honor of Dr Cha Chi Ming, founder of HKR International.
The companies recently provided email answers to questions posed by Shanghai Daily about the long-term outlook for the mainland market.
Q: When did you first tap the Chinese mainland real estate market and how large is your current operation here?
HKRI: We entered the market in 2000 and currently have hotels, office blocks, shopping malls and residential projects in Shanghai, Tianjin, Hangzhou and Jiaxing.
Swire Properties: Our first project — Taikoo Li Sanlitun in Beijing — opened in 2008. As of now, we have developed five large-scale, mixed-use developments in the Chinese cities of Guangzhou, Beijing, Chengdu and in Shanghai — the latter of which is still under construction.
Q: What role does the mainland market play in your company’s overall expansion strategy? What further investment do you plan here?
HKRI: Our strategy is to diversify our business in the Asia-Pacific region to optimize our portfolio and increase investment value. In the long run, our target is to spread our business more evenly among the three core markets of Hong Kong, the Chinese mainland and the rest of Asia. That will help us better mitigate property cycle risk in any one place.
Swire Properties: When the HKRI Taikoo Hui is completed, our mainland portfolio will contribute one-third of our overall gross floor area. We are very bullish on the prospects of our investments in the Chinese mainland, which is set to become a key source of our sustainable growth.
Q: How fast do you expect your Chinese mainland business to grow over the next couple of years and in which part of the country do you see the best opportunities?
HKRI: We will continue to invest in both commercial and residential properties, which will generate stable income in the long run and bring in rolling returns. We will continue to look for suitable investment opportunities in integrated commercial projects and other large-scale projects. In addition to first-tier cities, we will identify good projects in high potential second-tier cities to expand our footprint.
Swire Properties: We take a long-term perspective on the Chinese mainland as the fastest growing economy in the world. We believe domestic demand in the long run will be strong, and the market will have increased demands for well-managed, quality property.
Q: What competitive edge do you bring to your investments here?
HKRI: Innovation and creativity are the top priorities for HKRI when developing new projects. In order to stand out from other premium retail and commercial premises, it is very important to have an intimate understanding of the evolving requirements of both tenants and retail consumers.
Swire Properties: We are proud of our reputation for conceiving and designing projects that transform city landscapes. We create original and innovative retail-led, mixed-use developments of scale that lead to thriving neighborhoods. This year marks the Swire Group’s 150th anniversary in China as well as the 200th anniversary of the establishment of the Swire Group in the UK. Swire has faced many challenges in the past two centuries and we believe the most important thing is to maintain strategic focus and keeping one’s own pace.
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