WF CENTRAL on Wangfujing

Street in Beijing.

Mainland China continues to be a major engine for growth for Hongkong Land. Since 2017, the company has made seven new land and project acquisitions, expanded its business presence into three new cities, and opened its first luxury lifestyle destination in Beijing.

The company has further expanded its existing footprint in Chongqing, the largest city in south-western China and home to Hongkong Land’s greatest concentration of projects in mainland China.

In the past year, it has branched out into new markets in Wuhan, Nanjing and Hangzhou, as well as launching WF CENTRAL, a retail-led luxury lifestyle development on Wangfujing Street in Beijing, with a powerful mix of over 130 tenants. These include top-tier luxury brands such as Dior, Gucci, Fendi and Prada, as well as flagship stores of Victoria’s Secret and Furla, and global flagship

Perspective

stores of Under Armour and Pandora. There are also first- to-market restaurant and wellness brands such as CAFE LANDMARK, The Cheesecake Factory and Pure Yoga.

The development also includes a 73-room Mandarin Oriental Wangfujing, which offers views over The Forbidden City and Tiananmen Square. Planning is underway for similar projects elsewhere in Beijing as well as in Shanghai.

“WF CENTRAL is playing a key role in transforming and revitalising Wangfujing by bringing in global brands and adding sophistication and diversity to the area, while still retaining its rich cultural heritage,” said Hongkong Land Chief Executive Robert Wong.

“WF CENTRAL reflects our strategy of setting new benchmarks for quality wherever we invest and making each property a ‘best-in-class’ destination.”

Hongkong Land – Setting New Benchmarks in Mainland China

Seizing the OpportunityMainland China is the core market for Hongkong Land’s development property portfolio, accounting for just over 60% of the total developable area (as of June 2018) and, in 2017, total completed sales of US$2.4 billion.

Within Chongqing, Hongkong Land has eight projects spanning 4.3 million square metres, representing 76% of its mainland China exposure in this sector by developable area (as of June 2018).

The increase in spending power of China’s rising middle class has created many opportunities in the property market. Aspirations for a higher standard of living and a

Standing Out in the MarketHongkong Land has 21 years of experience in the mainland China property market and in that time has developed a solid reputation and become adept at overcoming challenges associated with operating in that environment.

One of the current challenges is how to deal with the cooling measures enforced in the past two years by the Chinese government – such as home purchase restrictions, selling-price ceilings and tightened credit – to curb overheating of the real estate market. The measures have suppressed supply and demand in the property market and developers have to adapt quickly to the constantly changing market environment.

In order to remain agile and stay ahead of the competition, Hongkong Land works with both local and international partners. The company also focuses on selected first- and second-tier cities that are expanding and upgrading. In Chongqing, for example, Hongkong Land invited Merlin Entertainments to open a Madame Tussauds and Sea Life underwater world in Landmark Riverside Park, their first such ventures in Western China.

This strengthened the development’s competitiveness as a major tourist attraction in Chongqing. Similarly, within ten months of opening, WF CENTRAL has partnered with international organisations including the Barbican Centre, Serpentine Galleries, and MAISON&OBJET.

Another creative solution is to acquire new projects through mergers and acquisitions. This allows Hongkong Land to enter into new markets without having to build up a local presence from scratch, and has led to its successful entry into Hangzhou and Wuhan.

Despite the Government’s cooling measures, in January, the average home price in China’s 70 major cities increased by 4.7% compared with the same period a year earlier, and a poll of 13 economists and property analysts forecasted an average increase of one percent in new home prices in 2018, according to figures from China’s National Bureau of Statistics. This is borne out by a rise in average prices in Chengdu, Chongqing and Nanjing where Hongkong Land has projects and also reflects a shortage of new residential properties in leading cities combined with inventory levels at a record-low.

“The demand for high quality properties in the residential, retail, and office markets is increasing,” said Mr Wong. “These are all sectors where Hongkong Land’s expertise, resources and delivery of premium luxury products are comparative advantages and will help us to expand in the mid- and long-term.”

In many ways the cooler ‘healthier’ market has been to Hongkong Land’s advantage, allowing more opportunities to acquire sites either through public

better lifestyle are generating greater demand for mid- to high-end residential homes and lifestyle and luxury retail offerings with bespoke products and services, as well as better education for children and healthcare for the elderly.

“In this respect, Hongkong Land is well-placed with its strong focus on the mid-to-high end of the market and its long established reputation for quality. These attributes differentiate us from the general development community,” said Mr Wong.

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Shanghai

Parkville

Hangzhou Bay

Hangzhou

Perspective

Chongqing Chongqing remains the most significant market in mainland China with three wholly-owned projects and five 50%-owned joint ventures. Two of these are recently acquired projects — Liangjiang, which is adjacent to New Bamboo Grove, and Lijia, a residential area along the south bank of the Jialing River. The 100%-owned Liangjiang project has a total gross floor area (GFA) of some 161,000 sq. m., while the 50%-owned site located in Lijia has a total GFA of some 114,000 sq. m. Both projects will be primarily residential with accompanying commercial elements, and will be completed in 2020.

NanjingNanjing Yue City is Hongkong Land’s first development project in Nanjing, a city rich in history and culture. A joint venture with China Merchants and Country Garden, the project has a prime location in the city centre, along the Qinhuai River and adjacent to the Old City Wall built during the Ming Dynasty over 600 years ago. The project, which will include high quality townhouses, duplexes, a premium retail mall and a luxury boutique hotel, occupies a riverfront site of 20 hectares with a total GFA of approximately 218,000 sq. m. Completion in phases is due in 2021.

Hongkong Land’s second acquisition in Nanjing is a commercial site in Xinjiekou, a mature business and retail district in the heart of the city. The project includes offices and retail components over a total GFA of 235,000 sq. m. and will be constructed by 2023.

tender, or existing landowners, who are prepared to negotiate with Hongkong Land because of its reputation.

“Last year the environment was healthier and developers were generally taking a much more measured approach,” said Mr Wong. “This contrasts with a red-hot market environment, like in 2016, when developers became very competitive due to ample liquidity.”

This is demonstrated by the fact that in 2016, Hongkong Land did not make any acquisitions in mainland China, while in the 12 months up to March 2018, it made seven.

“Some may think this is an exceptional rate of expansion, and possibly difficult in terms of management and finance,” added Mr Wong. “The reality is that acquisition opportunities of prime sites for either development or investment projects do not arise regularly, and Hongkong Land has gratefully captured these recent opportunities at reasonable prices, giving us the potential for good margins.”

Hongkong Land’s Footprint in Mainland China

New Projects Expand Horizons

HangzhouAnother new market for Hongkong Land, Hangzhou, the capital and most populous city of Zhejiang Province in east China, is best known for the celebrated West Lake, a UNESCO World Heritage Site. In a joint venture with Yanlord and Transfar Group, Hongkong Land will develop two mixed-used sites in Xiaoshan District. The project mainly consists of residential, retail and serviced apartments, supplemented with hospital and communal facilities as well as a hotel and convention centre. With a total GFA of approximately 776,000 sq. m., it is to be completed in phases by 2024.

WuhanWuhan Dream Land is Hongkong Land’s first joint venture development project in Wuhan, the provincial capital of Hubei Province and the most populous city in Central China, with one of the fastest growing economies in the country. The project is a high quality mixed-use development comprising residential, retail and office components located within Dongxihu District, the mid-point between the city centre and Wuhan Tianhe International Airport. A 50%-owned joint venture with Zall Group, the site has a total GFA of approximately 493,000 sq. m. and is to be completed in phases by 2024.

Bamboo Grove

Yorkville South

Central Avenue

Liangjiang Project

New Bamboo Grove

Yorkville North

Landmark Riverside

Lijia Project

Wuhan Dream Land

Wuhan

WE City

Chengdu

Maple Place

CBD project

Yue City

WF CENTRAL

Central Park

JL CENTRAL

Beijing

Nanjing

Chongqing

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2014Expanded to

Shanghai

Expanded to Wuhan, Nanjing and Hangzhou

2017

Perspective

Hongkong Land in Mainland China by Numbers

When Hongkong Land enters into new cities such as Wuhan, Nanjing and Hangzhou, we send core

members of the strong existing teams from other cities to start and lead the new teams. Meanwhile, we are

also supported by locally recruited talent and a centrally run professional service platform at our

headquarters and China region offices.

Hongkong Land Chief Executive Robert Wong

The History of Hongkong Land in Mainland ChinaSince its first direct investment in mainland China in 1997, Hongkong Land has been building its presence and setting new benchmarks for quality and luxury to meet the lifestyle aspirations of the country’s rising middle class.

1997First residential development in

BeijingOpened Landmark

Riverside Park, Chongqing’s first cultural tourism

complex

2016Opened WF

CENTRAL, its first retail-led project

in Beijing

2018

Chinese cities with Hongkong Land projects7

of development in Chongqing

4.3 million sq.m.

76%of 2017

developable area in China was

located in Chongqing

Nanjing Yue City

2010

Expanded to Chengdu

Maple Place

2005

Established presence in Chongqing

Total completed sales in China in 2017 (Hongkong Land’s attributable share of completed sales in 2017 was US$1.3 billion)

US$ 2.4 billion

of effective GFA in Wuhan, Nanjing and

Hangzhou

668,000 sq.m.

31 % of Hongkong Land’s operating

profit for the year 2017 attributable to mainland China

(including share of joint ventures and associates)

Hongkong Land’s attributable interest in revenue recognised from mainland China up

in 2017 from 2016

100%

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