Real Estate Rent "Stalls" While Sales "Soar" — What Has Swire Properties Bet Right on in Mainland China?

Ask AI · How can Shanghai luxury home sales offset declining rents?

(Writer: Sun Meixin; Editor: Zhang Guangkai)

Swire Properties recently announced its 2025 financial report, showing that this well-known Hong Kong commercial real estate developer has finally reversed the previous year’s decline in revenue and profit, with significant growth in core operating data.

Among them, Swire Properties’ performance in the mainland market has contributed greatly to the overall results, with the LV giant wheel at Shanghai Xinyie Swire City drawing praise and attention.

The financial report shows that last year, Swire Properties’ revenue reached HKD 16.041 billion, an 11% increase year-over-year; attributable profit to shareholders was HKD 8.62 billion, up 27%, both marking the largest gains in the past three years.

Swire Properties Chairman White Delly stated in the report that the company’s capital flow strategies, capital management, balance sheet, and improved retail performance in Hong Kong and mainland China have enabled sustained business development.

Despite the overall positive financial performance, a deeper analysis of Swire Properties’ results reveals that different business segments show both growth and decline trends. The advantage of traditional office rents is being eroded, but experiential retail spaces and retail income are becoming significant growth drivers.

In fact, the performance of this established Hong Kong real estate company over the past few years reflects, to some extent, the future trend of domestic real estate companies: different types of real estate assets perform variably over time, and only through diversified portfolios can overall performance be supported.

Shanghai luxury residences see 23-fold increase in property transaction income

Compared to mainland Chinese developers, Swire Properties, with its British background, exhibits typical characteristics of a Hong Kong-invested real estate firm: holding a large number of properties with leasing and investment value, with rental income and investment gains as main revenue sources.

This characteristic ensures relatively stable, liquid income streams each year, making overall revenue stable. However, since fewer properties are sold, large jumps in total income are less common.

Looking at Swire Properties’ 2025 performance, rental income from various properties remains the core revenue source, reaching HKD 13.014 billion, accounting for 81.13% of total income, truly a “ballast.”

However, this core income declined slightly last year, with rental income of HKD 13.014 billion down about 3.26% compared to 2024.

Meanwhile, operating profit of HKD 7.712 billion decreased by 6.52% year-over-year. Therefore, Swire Properties’ core rental income actually declined last year.

Against this backdrop, total revenue and attributable profit to shareholders still increased, mainly driven by non-regular property sales, i.e., project sales.

The financial report shows that property sales income last year was HKD 2.11 billion, a nearly 23-fold increase from HKD 88 million in 2024, with a year-over-year growth of 2297%. Although the absolute sales amount isn’t high in the industry, it accounted for 13.15% of Swire Properties’ total income last year, a relatively high proportion in recent years.

Additionally, property sales contributed HKD 497 million in operating profit, a significant improvement from a HKD 178 million loss the previous year.

The biggest contributor is Swire Properties’ high-end residential project, Swire Source Residence, sold in Lujiazui, Shanghai, since 2024. Developed jointly with Lujiazui Group, this project is regarded as a “Lujiazui flagship luxury residence,” with an average price exceeding HKD 170,000 per square meter, attracting some of China’s most affluent buyers, and repeatedly achieving impressive sales figures at each launch.

According to public information, in September 2025, the third batch of units at Swire Source Residence sold 36 billion HKD worth of 79 units. On the first day of the fourth launch in early January, 48 units sold generated HKD 2.64 billion in sales.

Based on data from Swire Properties’ financial report, since the project was launched in 2024, four sales events have sold 175 units, totaling HKD 11.7 billion in sales.

Besides residential sales, Swire Properties’ property transactions also include assets in global markets, such as the Miami Brickell City Centre shopping mall and two adjacent lands sold last year, as well as non-core assets like Tsing Yi industrial buildings and floors at Hong Kong Island East Centre.

Adding to this, the hotel business in 2025 contributed HKD 917 million, forming part of Swire Properties’ “core business” in the financial report.

Mainland retail shines again, with HKD 46 billion invested

In fact, not only did mainland residential sales perform well in 2025, but retail properties across mainland China also showed impressive rental income.

In the company’s Q4 results last year, the performance of retail at Shanghai Xinyie Swire City was highlighted. The Louis Vuitton (LV) flagship “Louis No.” opened at Xinyie Swire City in June last year, boosting the occupancy rate from the previous low to 96%, with sales increasing by 49.6%, marking a turnaround within the system.

The annual financial report again emphasized the positive impact of “Louis No.” on retail operations, while tenant optimization at projects like Beijing Sanlitun Taikoo Li also led to a noticeable rise in retail revenue.

The report states that in 2025, Swire Properties’ retail sales (excluding car dealerships) in mainland China increased by 7% year-over-year, surpassing 2019 levels by 65%. Specific projects like Beijing Taikoo Li, Yitian Port, Chengdu Taikoo Li, Guangzhou Taikoo Li, and Shanghai Xinyie Swire City all saw retail sales increase by 3% to 50%.

Retail sales growth is closely related to rental income from retail properties. The financial report shows that last year, rental income from mainland retail properties was HKD 4.628 billion, up 3% year-over-year; attributable rent income totaled HKD 5.353 billion, up 2%.

This is one of the few areas where Swire Properties’ rental income from various property investments increased last year. Overall retail property rental income was HKD 7.193 billion, down 2.6% year-over-year. Outside mainland China, Swire also has retail projects in Hong Kong and the US, but the US assets were sold last year. Therefore, growth in mainland retail properties effectively offset declines elsewhere.

Based on this performance, Swire Properties remains confident in the mainland market, with direct investment plans.

The financial report mentions that in 2022, Swire announced plans to invest HKD 100 billion in mainland China and Hong Kong. By March this year, HKD 46 billion had been allocated to mainland China, HKD 11 billion to Hong Kong, and HKD 10 billion for residential property sales in both regions.

In terms of consumer-facing changes, this includes brand upgrades and retail space renovations across various locations, as well as several new shopping centers set to open soon.

In brand upgrades, besides “Louis No.” at Xinyie Swire City, flagship stores for luxury brands like Dior and Louis Vuitton opened in Beijing Taikoo Li North, and new brands like TOTEME and HELLY HANSEN opened their first stores in the southern district, while the first ACG brand store in western China opened. Chengdu Taikoo Li introduced or upgraded 59 brands, and Guangzhou Taikoo Li added brands like Acne Studios, Guerlain, Helena Rubinstein, and Tom Ford.

Regarding upcoming projects, the Guangzhou Taikoo Li expansion is a key focus, with Phase 2 scheduled to complete in 2026 and Phase 3 by late 2027.

Additionally, the Beijing Taikoo Fong project, mainland China’s first Taikoo Fong, plans to open in phases by the end of this year; the Sanya Taikoo Li project, developed with China Duty Free Group, is also expected to open this year; and the Lujiazui Taikoo Source commercial project in Shanghai plans to open in phases starting in 2027.

Swire Properties’ management also mentioned that retail sales in mainland China have already grown by double digits in the first two months of this year. The strong performance of luxury and emerging domestic brands has improved rental and retail figures, with retail expansion remaining a priority. Clearly, having tasted success in the retail market, Swire Properties will continue to deepen its presence in mainland China.