Chief Executive’s Statement The speed of recovery of our hotel business in Hong Kong diversifying our portfolio, providing new sources of was slower than anticipated, while the performance of income as these projects come on stream over the next our hotels in the Chinese Mainland was relatively stable. few years. The performance of our hotels in the U.S.A. was mixed. The recovery of the Hong Kong office market has proven slower than expected in the wake of the pandemic. The Future Prospects market is likely to remain subdued for the rest of 2024, and rental levels will remain under pressure. However, in The outlook for the retail market in Hong Kong remains terms of occupancy, our office portfolio has consistently challenging. We expect that footfall and tenant sales will outperformed the submarkets we operate in. The continue to be impacted by the weak market sentiment, prevailing flight-to-quality trend in Hong Kong’s office particularly due to the propensity for outbound travel and market is also favouring premium, new office buildings changes in consumers’ spending patterns. However, such as Two Taikoo Place and Six Pacific Place. Leasing thanks to the continuous refinement of our retail trade for both these office towers is progressing well, with the mix, our activation and promotional strategies, and the former now 67% let and the latter currently at 44%. world-class events organised by the HKSAR Government, we anticipate that the sales performance of our malls will The latest phase of the redevelopment of Taikoo Place remain resilient. Experiential shopping will be a key part has been completed, transforming the area into a Global of our retail strategy and we will continue to invest in Business District. Our diverse amenity provision is a key innovative partnerships such as the latest collaboration differentiator and the newly opened Taikoo Square is a with the “Welcome to Anfield – the LFC Experience”. We showcase of our ambitious, nature-oriented design with a will look for more opportunities to leverage the crossover strong emphasis on wellness and ESG performance. More potential of our malls to engage a wider and more diverse outdoor dining concepts are now available with the customer base. opening of Taikoo Piazza, while new elevated walkways offer excellent physical and social connectivity In the Chinese Mainland, 2024 will be a year of throughout Taikoo Place. normalisation for the retail market following the 2023 post-pandemic peak. Overall demand for retail space is In the Chinese Mainland, we are taking inspiration from expected to remain solid, with retailers taking a more Taikoo Place to develop INDIGO Phase Two. With a new prudent approach to expansion in the second half of strategic partner, China Life, we will provide more than 2024. We anticipate that demand for luxury retail space four million square feet of commercial space in Chaoyang in Guangzhou and Chengdu will remain strong. We are District in Beijing. Construction is well underway and the focused on reinforcing our Chinese Mainland portfolio development will be completed in phases starting from through reconfiguration works and tenant mix late 2025. enhancements currently being carried out across several On the residential front, market sentiment in Hong Kong developments, including Taikoo Li Sanlitun in Beijing, remains soft in light of economic uncertainties and the Taikoo Li Chengdu and HKRI Taikoo Hui in Shanghai. high interest rate environment, despite the HKSAR Under our HK$100 billion investment plan we are Government’s recent decision to relax tightening developing a pipeline of new retail-led projects, including measures. Market confidence will take some time to in Xi’an, Sanya and Guangzhou, and two large-scale recover, but we expect demand to remain resilient over developments in Shanghai. We are expanding and the medium to long term, supported by interest from both local and Chinese Mainland buyers. 14 Swire Properties Limited Interim Report 2024