Making places

Computer rendering of the Phase Two Extension of INDIGO, Beijing.
Computer rendering of the Phase Two Extension of INDIGO, Beijing.
Swire Properties' Chief Executive Guy Bradley finds multiple reasons for optimism despite recent challenges, as the business continues its 'placemaking' mission to creatively transform locations in Hong Kong, the Chinese mainland and beyond.

After a challenging 12 months across multiple sectors of the global economy, the end of 2020 brought affirmation that Swire Properties ranks firmly among those businesses for whom there is no question of scaling back on ambition.
Guy Bradley, Chief Executive of Swire Properties.
Guy Bradley, Chief Executive of Swire Properties.
As described by the developer's Chief Executive, Guy Bradley, December's announcement of a successful bid to build an extension of INDIGO – a world-class, mixed-use development in the Jiangtai neighbourhood of Beijing's Chaoyang District – equates to a "major investment" in a "milestone project".

"INDIGO is a perfect example of our ability to transform a neighbourhood," he commented at the time, adding that winning the bid "fully testifies to Swire Properties’ strong confidence in and long-term commitment to the Chinese mainland."

What's clear is that the business hasn't let COVID-19 knock its long-term focus and stands well-positioned to take advantage of recovery on the Chinese mainland and beyond. Besides the INDIGO expansion, after exploring new opportunities in Shenzhen for three years, Bradley’s team recently opened an office locally in search of suitable projects in the Greater Bay Area, and have a number of key developments in play in Hong Kong.

On the subject of the latter, moreover, he is emphatic that Swire Properties is committed to its home city and is actively looking for more projects. In conversation with Swire News, he is unequivocal in his response to recent conjectures about the sale of the Cityplaza One office tower signalling an intent to divest from Hong Kong. Not only is the capital from the sale of Cityplaza One being "recycled", he stresses, but major projects are underway that will help to re-draw the map of urban Hong Kong for generations to come.

"If you look at the money we're spending, we're putting US$2 billion into developing two state-of-the-art triple-grade A office buildings at Taikoo Place," says Bradley. "One Taikoo Place is open, the second building will be finished by the end of 2021, or early in 2022, and we are already thinking about Three Taikoo Place. We're also building out Pacific Place along Queen's Road East and we have a handful of new residential projects under development following a couple of quieter years on the home-building front. There’s EIGHT STAR STREET, in Admiralty, another project down at the east end of the Island, in Chai Wan, and we were successful in a consortium bid to build one of the phases around the MTR station at Wong Chuk Hang.

"There's so much evidence that we're upping our investments, and actually the sale of Cityplaza One is part of our strategy to recycle capital. What you do is sell your non-core assets and reinvest the proceeds into higher value-adding strategic projects."

Another pillar of the company's strategy over the years has been its mixed-use approach to development – an approach that has crystallised around the concept of 'placemaking'. And for Bradley, nowhere epitomises what placemaking is about better than Taikoo Place.

"What we're building with Taikoo Place is really a global business hub," he says. "There's a huge neighbourhood underway – a mix of residential, office and retail – and I would say it's placemaking at its very best. To do placemaking well, you need to have a long-term approach. You need to stick around and become part of the fabric of the community. That really speaks to our core values."
Through effective placemaking and continuous upgrading and expansion, Taikoo Place is set to be a prime decentralised office area in the city.
Through effective placemaking and continuous upgrading and expansion, Taikoo Place is set to be a global business hub.

Best days ahead

Of course, choosing the right location, supported by the right transport infrastructure, helps. With Taikoo Place, Bradley believes these factors have aligned to drive an eastward shift in Hong Kong that he calls "decentralisation". "It's about moving things away from Central where the building stock is ageing and space is constrained," he explains. "With the Wan Chai Bypass, the Eastern part of the Island – and Taikoo Place in particular – has really been opened up as a credible alternative to Central."

Further evidence of this pivot away from Hong Kong's traditional CBD is perhaps offered by Central's eastward expansion. "With the addition of the South Island MTR line, and the Central to Sha Tin Link coming soon, Admiralty will be the biggest station in terms of lines and volume of people. We're scaling up Pacific Place at just the right time."

That sense of optimism is bolstered, moreover, by a confidence that the office sector is well-positioned to rebound from COVID-19.

"Hong Kong isn't London or California," says Bradley, identifying the absence of long commutes in the city and, for many, a lack of space in homes often shared with extended family members, as factors apt to shape a general lack of desire for extensive work-from-home arrangements. He acknowledges that high-density workplace trends such as desk-sharing and co-working are likely to be impacted. However, he doesn't anticipate lasting structural changes occurring. "We think the Hong Kong office sector's best days are still to come."

In terms of retail, meanwhile, he expresses satisfaction that the business has managed to keep its malls occupied over the course of an extremely challenging 18 months. "In Hong Kong, we've had a period of social unrest, followed by COVID-19, so the sector has been hit pretty hard. The good news is that by adopting a partnering approach with our tenants, we've kept our malls full.

"We were quick to recognise the pain they were under in the summer of 2019 and were the first of the major landlords to deliver rent concessions. We've carried on doing that, in some cases to allow our tenants to stay in business. It requires a long-term, strategic view, because we want these relationships to be sustainable over time. When the tide turns and things start picking up, we'll be in good shape."

Top attractions

To see examples of where the retail tide has already turned, one only need glance over the border. On the Chinese mainland, Swire Properties' malls are now delivering extraordinary revenues, in the wake of COVID-19.

Bradley notes that in a couple of locations, sales and rental income have in fact been higher, year-on-year, than in 2019. "February and early March was a tough time in China but since then the recovery has been incredible," he says. "People can't travel outside of China – so places like Guangzhou, and our Taikoo Hui mall there, have benefitted, because people are going there and spending money instead of spending it overseas."
We think the Hong Kong office sector's best days are still to come.
Aside from INDIGO, Swire Properties' current projects on the Chinese mainland divide into two types: Taikoo Hui ventures in Guangzhou and Shanghai, and Taikoo Li developments in Beijing and Chengdu, with a third Taikoo Li development – Taikoo Li Qiantan, in Shanghai – scheduled for a soft opening in September. Both concepts incorporate mixed-use elements such as office towers and hotels, and involve "best-in-city" locations. Taikoo Hui malls conform to more of a traditional, enclosed design, whereas the Taikoo Li model is about low-density layouts that combine indoor and outdoor spaces.

Bradley comments that approach has worked well and that the company’s malls have emerged as coveted destinations on a national scale.

"The Taikoo Li projects have done amazing things for the Taikoo name on the Chinese mainland," he says. "Back in 2010/2011, we had a lot to do on that. We weren't terribly well-known and we were really just starting to build. The recognition we have now is an indication of the job the team has done in getting consumers to understand that we create special places tailor-made for their home cities.

He elaborates: "The stats from DiDi, China's Uber, put both Taikoo Li Chengdu and Taikoo Li Sanlitun, in Beijing, among the top 10 destinations for the entire country during the national holiday week in October last year. Sanlitun was already famous as an entertainment and embassy district before we got there, but now it's become almost iconic, and sits on the city government's list of places to take overseas delegations, among other key attractions including Tiananmen Square and the Bird's Nest."

"Meanwhile, our Chengdu development has become one of the top destinations in China. According to video-sharing platform Douyin, Taikoo Li Chengdu was the only shopping mall that made the top ten tourist attractions in China during the national day holiday in 2020. There have been an astonishing 11 billion viewings on the platform since Taikoo Li Chengdu opened five years ago."

With Taikoo Li Qiantan, Bradley is hopeful that Swire Properties' placemaking story will continue. "The theme this time is centred around health and wellness – that's a different direction, and a trend we want to be a part of. It'll also be the most digitally-friendly and digitally-savvy mall we've ever designed. With the way consumer habits are changing, staying digitally relevant is how you keep consumers wanting to go to destination shopping malls and spending money in them."

He adds that the business is well-poised to pursue further growth opportunities in the Chinese mainland market. "We're in a good position to do a few more projects, but the winning formula is about picking world-class locations either in tier one cities or in special tier two cities like we did in Chengdu, and then of course designing great products. The top criteria we use are location and entry price. The tier one city that's missing for us is Shenzhen, and our team there have been looking for opportunities that meet those tests."
Taikoo Li Qiantan embodies Swire Properties’ “Taikoo Li” concept, which is well-known for its distinct openplan, lane-driven architectural design.
Taikoo Li Qiantan embodies Swire Properties' "Taikoo Li" concept, which is well-known for its distinct open-plan, lane-driven architectural design.

Laying foundations

Another region where the company hopes to expand its footprint is Southeast Asia. Swire recently opened an office in Bangkok that will cover both Thailand and Myanmar, and this complements existing set-ups in Singapore, Jakarta and Vietnam, three markets where the business is already pursuing residential projects.

"We're leading with residential because these are new markets for us," says Bradley. "With residential, you can learn a lot quickly, because the projects tend to be smaller in scale and turn over faster. And right now, we're in that learning phase.

A sustainable approach

Long-term thinking, patience, understanding communities, a partnering approach: these are all aspects of Swire Properties' playbook that point to a holistic way of thinking about sustainable development, and Bradley offers a touchpoint from the company's Chinese mainland story that serves to illustrate a deep commitment to building trust and acting responsibly.

With Taikoo Li Chengdu, he recalls, the project involved "wrapping a shopping mall around a living, breathing thousand-year-old temple." Being trusted by the local district government to do so with sensitivity for the local surroundings was a responsibility he and his team took extremely seriously, and the end-result is a development that preserves the heritage of the site within a new and improved mixed-use environment. "That's probably one of the reasons we have become such a respected name on the Chinese mainland," he reflects.

At a strategic level, meanwhile, Swire Properties has been committed for some time to its vision of leading the global real estate industry in sustainability by 2030.

"At the turn of the century, we were really focused on the energy aspect of sustainability, and the environmental side of it," Bradley recalls. "We made some good progress on that, but by 2016 we felt we needed to widen it across the whole business, so we created a new long-term vision. In 2020, we were the only Hong Kong company to be listed on the Dow Jones Sustainability World Index for the fourth consecutive year, and ranked among the top five percent of real estate developers around the world. We have also done a lot to nurture and develop a diverse and industry-leading team, and we were extremely proud to be voted Hong Kong's "Most Attractive Employer" in Randstad's 2020 Employer Brand Research."
Swire Properties' Community Ambassadors take part in an elderly care programme.
Swire Properties' Community Ambassadors take part in an elderly care programme.
Other examples he cites include "having the highest female representation at board level and at senior management level in our peer group in Hong Kong", an initiative called ‘Sustainability We All Count' that gives everyone in the business the chance to contribute towards Swire Properties' sustainability goals, and an ambassador programme that involves thousands of hours of community volunteering every year.

"Sustainability is all-encompassing for us," states Bradley. "It's everything from energy reduction and green building to innovating through technology in our retail malls, to just getting out into the communities we serve. As a developer, ultimately you have to build places people want to be in. If you design and build good projects and stick around and do the right thing, that long-term approach to placemaking is what brings reward."
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