retail sales (excluding Taikoo Li Sanlitun West and Taikoo Li to 35,000 square feet at Two Taikoo Place. Some of the Qiantan) decreased by 20% on an attributable basis. Our committed tenants will relocate from Central, reinforcing office portfolio in the Chinese Mainland proved resilient the current and continuing decentralisation trend and despite COVID-19 related controls in the cities in which Taikoo Place’s rising status as a Global Business District. we operate. A “New Central” is forming around the Admiralty area, Underlying profit from property trading in 2022 reflected and we are well positioned to take advantage of this with the completion of sales of 27 units at our EIGHT STAR our diversified office and retail developments and by STREET residence in Hong Kong and the share of profits reinforcing our greater Pacific Place offering. In 2022 we from sales at The River project in Ho Chi Minh City, announced our newest Grade A office tower, Six Pacific Vietnam. Our hotel business in Hong Kong and the Chinese Place, and the renaming of 28 Hennessy Road as Five Mainland was adversely affected by COVID-19 and its Pacific Place. We also achieved another milestone with our associated travel restrictions. successful bid for a residential site at 269 Queen’s Road East in Wan Chai, a prime location which will support the Our Future Prospects eastward expansion of our greater Pacific Place portfolio. The office market in Hong Kong is expected to remain weak As Hong Kong reconnects to the world and closer financial in 2023, reflecting increased vacancy rates, new supply integration with the Chinese Mainland is realised, we and global economic uncertainty. We also anticipate that expect to see continued improvement in the financial competition from Central and Kowloon East will exert markets. Hong Kong’s strategic role as an international downward pressure on rents. However, our office portfolio financial centre will be strengthened in the long run. remains resilient in a weakened market, due to a well- We remain confident in the long-term prospects for the managed profile and solid occupancy rates. Taikoo Place in Hong Kong office market, and we anticipate an increase in particular, is benefiting from the flight-to-quality, with demand for Grade-A office space, particularly from financial prospective tenants placing a higher value on sustainability institutions and professional services firms in the medium and wellness. term. Under our current masterplan for our core portfolios, Under our HK$100 billion investment plan we are we are well-placed to benefit from a positive shift in market continuing to expand our Taikoo Place and Pacific Place sentiment, as well as current trends shaping the future portfolios, offering unmatched, triple-Grade A office space of work. alongside top-tier amenities, and supported by strong We are very pleased with the relaxation in Hong Kong’s ESG credentials. Amidst strong competition, these are travel policy which will provide a welcome boost to Hong the placemaking attributes which represent the future of Kong’s retail sector in due course. Despite a difficult 2022, the workplace. we anticipate that footfall and retail sales will gradually Our newest office tower, Two Taikoo Place, obtained its improve across our Hong Kong malls in 2023. In the occupation permit in September 2022, and we have been meantime, we will strengthen and refine our trade mix and making good progress with the leasing campaign despite upgrade the amenities in our malls. We will also continue to market conditions, with a pre-leasing commitment of over invest heavily in our loyalty programmes to engage our 56%, demonstrating the resilience of our office portfolio. In growing membership base. addition to Swiss wealth management group Julius Baer, The Chinese Mainland is now a major contributor to our which earlier confirmed that it will take up four floors revenue growth. Under our investment strategy, we aim spanning close to 100,000 square feet, more companies to double our gross floor area in the region over the next have committed to moving into Two Taikoo Place. decade, investing HK$50 billion to grow our retail-led These include Sumitomo Mitsui Banking Corporation, Taikoo Li and Taikoo Hui brands in Tier 1 and emerging Japan’s leading bank, which will lease two floors spanning Tier 1 cities. The reopening of the border will have a 45,000 square feet, and the Accounting and Financial positive impact on our business and we expect to see Reporting Council, which confirmed plans to take up close moderate to strong demand from retailers. 25 SWIRE PROPERTIES ANNUAL REPORT 2022