Hongkong Land has increased its real estate investment: upgrading Hong Kong's luxury landmarks, and mainland projects are booming

Interface News Reporter | Wang Tingting

Whether in Hong Kong or the mainland, Hongkong Land has ushered in a "high-profile moment" this year.

On June 26, Hongkong Land announced the launch of the "Tomorrow's CENTRAL" project, which will comprehensively upgrade its Central Landmark Plaza, with an estimated total investment of more than US$1 billion (about HK$7.8 billion) for a period of three years.

Opened in 1980, Landmark in Central, Hong Kong is one of the most exclusive shopping malls in Hong Kong. Hongkong Land believes in the long-term opportunities in the area and has made a decisive investment to strengthen the group's portfolio in Central, "while supporting its international tenants to go global." ”

On the mainland, Hongkong Land's Chengdu Halo Shopping Park in Chengdu officially opened its doors on 22 June. It is understood that the total area of the project is about 2.37 million square meters, integrating retail, catering, leisure and entertainment, office buildings, hotels and commercial, and the pre-lease rate of the retail part is close to 90%.

Not only commercial, in the first half of this year, in the residential field of the market downturn, Hongkong Land's Qiyuan project in Xuhui Binjiang, Shanghai, opened for selection, with an average price of 178,000 yuan per square meter, and all 80 units launched were sold out, recording sales of about 4.455 billion yuan.

Founded in 1889, this Hong Kong real estate company has begun to usher in a period of "rapid" development after more than 100 years of "low-key and stable operation".

Long-term bullishness on Hong Kong: US$1 billion to renew Landmark Plaza

"Hong Kong's retail market is indeed facing challenges in the short term, but the company is a long-term investment, a long-term vision, and has confidence in Hong Kong consumption."

On June 26, Hongkong Land announced in Central, Hong Kong, that this "retail giant" with a history of more than 40 years will soon be renewed. Hongkong Land will invest US$400 million (about HK$3.1 billion) to comprehensively expand and upgrade its retail property portfolio at Landmark Plaza, with the first phase of construction starting in the third quarter of this year, with new projects opening between 2025 and 2028.

Landmark luxury brand tenants will also invest more than US$600 million (HK$4.7 billion) in addition. These brands, including Cartier, CHANEL, Dior, Hermès, Louis Vuitton, Prada, Yves Saint Laurent, Sotheby's, Tiffany & Co. and Van Cleef & Arpels, have committed to co-creating the landmark project with Hongkong Land.

According to Hongkong Land, the "transformed" landmark will bring together 10 world-class Maison destinations, a new high jewellery and watch street, a fashion and beauty world, and an immersive art space. The 10 branded homes will double the retail space of luxury brand tenants to 21,000 square metres.

In addition, the brand's flagship landmark will be one of the largest stores in the world for individual brands. It is understood that the expanded space will not only enable the brand to display more product categories, but also bring personalized and distinguished experiences such as haute couture clothing, private dining concepts, open-air platforms and double-storey VIP lounges to its "super VIPs".

Among them, Sotheby's, the world's top art and heritage auction house, will bring its flagship gallery on the second floor of the Landmark Chater Building, with a total area of about 2,230 square meters. It is currently on fence and is expected to be unveiled in July 2024.

At Hongkong Land's Alexandra Tower, Hongkong Land will establish a haute horlogerie boutique street along Chater Street, aiming to benchmark retail destinations such as Parisian jewellery landmark Place Vendome, which is expected to be completed in 2027.

Not only that, the atrium of The Landmark will be transformed into a fashion and beauty world, and the project is expected to be completed in 2027. The upgraded Landmark will not only house world-class luxury brands, but will also see a new food and beverage expansion that will add more than 30 restaurants to 100, including 16 Michelin-starred restaurants.

"Hongkong Land's strategic investment with luxury brand tenants is not only a testament to Central's importance as Hong Kong's commercial and retail hub, but also our strong belief in Hong Kong's status as an international financial centre." Michael Smith, Chief Executive Officer of Hongkong Land, said the refurbishment will further strengthen Hongkong Land's Central portfolio as one of the world's most attractive places to live and work.

According to Kwok Wing Lee, Chief Shopping Mall Business Director of Hongkong Land's Commercial Property in Hong Kong and Macau, this strategic investment is one of the company's most correct decisions, and the company's data reflects the company's data as one of the major markets with the world's most high-end and exclusive customer base.

"Hongkong Land's most loyal customer base accounts for 80% of the company's total membership program sales. In 2023, these customers will spend as much as HK$100 per capita at The Landmark and will come to the Landmark every other week to make purchases. Li Guorong said.

Therefore, Hongkong Land is not worried about the phenomenon of "Hong Kong people collectively going north for consumption" this year.

Hongkong Land's self-confidence also stems from its solid financial strength.

It was revealed that the capital expenditure for the upgrade of the project will be paid over three years. As at 30 March 2024, the Group's gearing ratio was 16% and available liquidity was US$3.1 billion (approximately HK$24.2 billion).

"While rental income will be reduced slightly during the upgrade period, the Group expects the investment to lead to stronger tenant sales and retail revenue growth in the future." Hongkong Land's senior management said.

Acceleration in the Mainland: "7 Cities and 10 Rings" in the Next 5 Years

In Shanghai, Chengdu and Wuhan, in half a year, Hongkong Land has stepped out of acceleration in the mainland market.

The nearest is Chengdu Halo Shopping Park. On June 24, Hongkong Land announced that the project has officially opened on June 22, providing retail, dining, leisure and entertainment, office, hotel and commercial formats.

Specifically, Chengdu Halo has a total of 7 floors of about 110,000 square meters of large-scale shopping space, and about 90,000 square meters of two Grade A office buildings "Halo Center" to serve local headquarters enterprises. In addition, the mixed-use commercial property is also connected to the 2,200-square-meter Hyatt Regency.

This is Hongkong Land's first wholly-owned commercial property project in Chengdu, and the second project in the Halo series after the opening of Chongqing Halo Shopping Park in 2021.

Ling Changfeng, Executive Director of Hongkong Land China Property Development and Investment, believes that Hongkong Land is actively exploring China's vibrant commercial real estate market with its two commercial property series, "Central" and "Halo". Among them, the "Chengdu-Chongqing Economic Circle" is the engine of commercial and consumption growth in the southwest region, and the opening of Chengdu Halo marks an important development milestone for the company in the region.

In addition, this move also means that Hongkong Land can capitalize on the rapidly growing consumption power in the region and further expand its business in the "Chengdu-Chongqing Economic Circle", which has a GDP of more than 8 trillion yuan (data source: Chongqing Bureau of Statistics).

According to Jiemian News, Hongkong Land entered the Chengdu market in 2010 and has successively invested in and created residential projects such as Global Place, Tianhu Bay, Tianhu Cuilin, Xiyuan and Guiyunli.

More than two months ago, the commercial complex in Wuhan also ushered in new developments.

On May 14, according to a report released by Wuhan, Hongkong Land's first "halo" project in central China, the "Wuhan halo" commercial complex, is speeding up the overall construction progress, and is expected to start the civil works of the three-story basement in the third quarter of this year, which will be built into concentrated commercial, high-end residential, commercial villas, office buildings, theaters, quality apartments, etc.

According to the construction schedule, it is expected that in the third quarter of this year, the complex will begin civil works on the three-story basement, which will be completed and opened in 2027.

It is worth mentioning that the project is wholly owned and operated by Hongkong Land, with a total investment of 2.3 billion yuan.

In the first-tier city of Shanghai, Hongkong Land is even more generous.

In February 2020, Hongkong Land Consortium won the bid for the financial port plot on the west bank of the Xuhui Riverside River in Shanghai for 31.05 billion yuan, which consists of five neighborhoods and 28 land plots, with a total area of about 23 hectares and a planned construction area of about 1.09 million square meters.

According to the planning plan, the project has three commercial buildings for sale, planning about 2,204 units, two 21-storey residential buildings in the northernmost part of the project and a 6-storey residential building in the southernmost side, and the rest are commercial, affordable housing, rental housing and cultural and sports buildings, with a total investment of more than 60 billion yuan.

In April this year, Hongkong Land caught up with the hot sales of Shanghai's luxury real estate market and launched 80 Hongkong Land Qiyuan units in the West Bund Financial City, with a construction area of about 258-548 square meters, and an average price of 178,000 yuan per square meter, which was finally a big seller.

The real estate industry is still in a period of deep adjustment, but Hongkong Land has become faster and has decided to increase its layout in the mainland.

Ling Changfeng made it clear that Hongkong Land plans to launch 10 new commercial projects in seven mainland cities in the next five years, and the total retail leasable area of new interests is expected to reach 360,000 square meters. "The new projects will join existing commercial properties in Hong Kong, Macau, Beijing, Chongqing and Shanghai to form a more comprehensive business layout, and will increase Hongkong Land's total number of commercial properties in China to 17."