Investor profile: Swire’s diverse approach secures recovery and growth

While exposure to Covid-vulnerable sectors including hotels, offices and shopping centres meant a tough few years for Hong Kong’s Swire Properties, the real estate arm of conglomerate Swire Pacific has been enjoying a significant recovery in the last 18 months.

Its annual report for 2023 – released in March of this year -– underlines its chief areas of growth. The firm saw its profits increase by 33 percent year-on-year, with its hotel business in Hong Kong and the Chinese Mainland recovering strongly following the lifting of travel restrictions and the reopening of borders. “We are very pleased with the encouraging results after the challenges of the pandemic, and we are optimistic for the year ahead,” said Guy Bradley, chairman of Swire Properties, on the earnings release. “We believe the HKSAR Government’s initiatives to promote Hong Kong’s tourism and to boost local consumption, in particular by staging world-class events, will continue to have a positive impact.”

With a parent company exposed to brands ranging from Coca Cola to Cathay Pacific, Swire Hotels, a division of Swire Properties, is no stranger to the big leagues. Conglomerate Swire Pacific, headquartered in Hong Kong, has a distinguished pedigree in Greater China where it has dominated in fields including beverages, aviation and real estate for several decades. As the majority shareholder in listed firms Swire Properties and Cathay Pacific Aviation, Swire Pacific has deepened its credentials in real estate, lifestyle and travel over recent years. Now, Swire Hotels, part of its property arm, has big ambitions to expand amid a broader bet on real estate.

Investment drive

In 2022, Swire Properties revealed it would be rolling out a HK$100 billion real estate investment plan over the next ten years. To date, almost 60 per cent of that has been committed to new and ongoing projects. Those ambitions start on home turf, where Swire Properties intends to double its gross floor area in the Chinese Mainland by 2032.

A chief hallmark of its development strategy is its mega mixed-use schemes, which act as flagship mini cities, combining all the asset classes Swire does best. The massive Taikoo Place is currently undergoing a HK$15 billion redevelopment, with plans to add biodiversity-friendly green open spaces and climate-controlled suspended walkways as it converts two adjacent industrial buildings that it recently acquired. This decentralised office hub in Hong Kong’s Quarry Bay will add two more office towers to its current footprint, which already comprises extensive office space, hundreds of hotel rooms and apartments, some two-hundred restaurants and numerous retail outlets.

Swire also has plans to pursue further geographical expansion. The company recently signed a Strategic Framework Cooperation Agreement with the Futian District Government to explore new prospects in the Shenzhen city district. In Shanghai, it is planning two major mixed-use developments, while Swire also has its eye on conquering two further Chinese cities, Xi’an and Sanya. In South East Asia, Swire Properties is focused on the markets of Jakarta in Indonesia, Ho Chi Minh City in Vietnam, Bangkok in Thailand and Singapore, mostly the target for residential and luxury living schemes.

Stand-alone hotels

Stand-alone hotels are a part of the expansion plan as well, with Swire planning to add chiefly to The House Collective brand, while continuing to manage its collection of East Hotels. Swire Hotels originally launched in 2008 and has grown to comprise over a dozen hotels and restaurants in Hong Kong, the Chinese Mainland and the US. In 2013, Swire Hotels set up Swire restaurants to manage its growing collection of stand-alone dining operations. Swire Properties also has investment shares in hospitality properties in Hong Kong, the Chinese Mainland and Miami, Florida.

Its award winning brand, The House Collective, currently includes The Upper House (Hong Kong), The Opposite House (Beijing), The Temple House (Chengdu) and The Middle House (Shanghai). Last year, the firm unveiled plans to launch new properties in Tokyo and Shenzhen, while a further property in Xi’an has also been recently unveiled as part of the firm’s plans to establish a meaningful footprint in the expanding city in north-central China. The House in Xi’an, which does not yet have a definitive name, will be located in the Small Wild Goose Pagoda historical and cultural zone. The hotel is part of the Taikoo Li Xi’an mixed-used development, a joint venture between Swire Properties and Xi’an Qujiang New District, on which work recently commenced. The hotel, with an expected 115 guest rooms and 55 residences, will also take design references from local cultural relics and traditions, in line with other properties in the House Collective brand. Explains Toby Smith, deputy chairman of Swire Hotels: “This new House in Xi’an, a city of such historical and cultural significance, marks another important step in the growth of The House Collective brand.

“We always strive to create memorable experiences that truly marry our passion for luxury hospitality with the local culture, and this world heritage site, with its Jianfu Temple, a royal temple of Tang Chang’an, offers the perfect stage for us to continue this journey.”

Green commitment

Swire Properties continues to make significant strides on the sustainability front. In 2023, the business was ranked second globally on the Dow Jones Sustainability World Index.  In the same year, Swire Properties became the first Hong Kong corporate to issue a public “dim sum” green bond of RMB3.2 billion to fund eligible projects. According to Swire, proceeds will be funnelled into developing projects with the highest green credentials, “and in the long term, pave the way for Swire Properties to pioneer new ground in sustainability”, the firm reports.  Over the past year, Swire Properties has piloted the adoption of an internal carbon pricing mechanism, which seeks to determine the potential impact of carbon emissions from its investments and quantify carbon risks to its operations. This in turn allows the company to prioritise the allocation of capital to low-carbon investments in the longer term.