Swire Properties Limited (1972) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen. Welcome to Swire Properties 2023 Annual Results Analyst Briefing. Before we begin, let me first introduce the hosts of today's briefing. With us on stage are Mr. Tim Blackburn, Chief Executive of Swire Properties; and Ms. Fanny Lung, Finance Director of Swire Properties. Tim and Fanny will first take us through the 2023 annual results. Then we'll proceed to a Q&A session. Before we start the presentation, may we first take a look at a short video with highlights of the company's key developments and milestones over the last year. Please enjoy. [Presentation]

Hope you all enjoyed the video. May I now invite Tim and Fanny to take us through the presentation. Tim, please?

Okay. Thank you very much. Well, good afternoon, everybody. Thank you for joining us this afternoon. Welcome to the Swire Properties 2023 Annual Results Briefing. As usual, I'll take you through the results highlights, our strategy, the key developments as well as the portfolio updates. And Fanny will take you through the financial highlights, the sustainability and digital transformation updates before I close with some brief comments on our outlook for the year ahead. So I was pleased with the solid set of results in 2023. And in terms of the recurring underlying profit, the result was up 2% relative to 2022. But underlying profit was up 33% due primarily to our continued capital recycling efforts and the sale of 12 floors at One Island East in Hong Kong. Following the lifting of the pandemic-related restrictions and the reopening of the borders, we've seen a strong recovery in Hong Kong and in the Chinese Mainland and particularly for our retail portfolio and for our hotels whilst our office portfolio has been resilient despite subdued market conditions in Hong Kong. We have made significant progress with a $100 billion investment plan, and we remain committed to deliver mid-single-digit dividend growth. So specifically regarding our $100 billion investment plan, this slide includes a breakdown of the allocation of capital by market and the specific projects which we have successfully secured. We've continued to make good progress through the second half of the year, with approximately 60% now committed to new projects in our core markets, being Hong Kong, the Chinese Mainland and Southeast Asia. With a balanced portfolio, we're making good headway in all strategic areas. Since the interim results, we've successfully bid together with our partner, the Lujiazui Group for a 40% interest in 2 mixed-use projects in Pudong and, Shanghai marking our entry into the premium residential market in the Chinese Mainland. In the fourth quarter, together with our joint venture partner, we obtained 100% ownership in a significant residential project in Taikoo Place, and we've just obtained the occupation permit for our latest Grade-A office tower Six Pacific Place in February. In terms of capital recycling, in November, we announced the sale of the 12 floors in One Island East for HKD 5.4 billion. And the team has now concluded the sale of the remaining car parks in Taikoo Shing. So looking ahead, we've been building a diverse pipeline of new commercial and residential projects in all key markets to support our long-term growth targets. You will note, since the midyear, the significant interest -- the increase in attributable GFA to be completed in the Chinese Mainland as we scale up our investments in Shanghai. So these 2 slides will introduce these projects in Pudong District. Firstly, the Shanghai New Bund project, which is a large-scale mixed-use project, immediately adjacent, you can see in the photograph, Taikoo Li Qiantan, next to the site. Immediately adjacent to our very successful Taikoo Li Qiantan Mall, this project comprises high-end retail, 2 Grade-A office towers and premium residential, and presales of the residential have performed extremely well in 2023. Second project is the Yangjing riverside project. It's a mixed-use project located in a fabulous location, so you can see from the photograph, along the Huangpu River. And it comprises high-end residential, retail office, some very interesting heritage and cultural facilities and a hotel. And we expect that presales will commence in the second half of this year. So on the capital recycling front, we've continued our successful program of capital recycling with the completion of the sale of 300,000 square feet at One Island East. And these process will be -- proceeds will be reallocated to fund future investments in accordance with our long-term strategy to invest here in Hong Kong. So moving to the investment portfolio. The Hong Kong office portfolio has remained resilient with overall occupancy at 93%. Occupancy in Pacific Place has slightly increased since the midyear. It's now at 98%. But Taikoo Place, One Island East and One Taikoo Place, occupancy is currently at 93%. Occupancy across the other Taikoo Place towers is at 90%. And occupancy at Two Taikoo Place, our newest building, has increased to 62%, which is very encouraging given the prevailing market conditions. I think negative rental reversions reflect the subdued market activity. On the retail front, it's a brighter outlook. We're pleased to see a strong recovery in our retail portfolio in Hong Kong. Occupancy at Pacific Place is at 96%, and Cityplaza and Citygate Outlets remained 100% leased. Year-on-year, retail sales performed well across the year. We're up 6% in Cityplaza but up 44% in Pacific Place and 43% in at Citygate Outlets. So this slide illustrates the ongoing transformation of Taikoo Place. And in addition to the elevated walkways, the new alfresco dining concepts, the expansive green open spaces at Taikoo Square and Taikoo Garden, the slide shows the ongoing transformation, and the highlighted areas mark our future office and residential development. We remain very optimistic about the long-term future of Taikoo Place as a global business district within Hong Kong and the Greater Bay Area. But we're also expanding our flagship development around Pacific Place as the shift in urban gravity from Central to Greater Admiralty continues. We've completed the development of Six Pacific Place this year, and we'll be unveiling a new footbridge across Queensway later in the year, which will significantly improve access to the mall at Pacific Place and enhance connectivity between the mall and Harcourt Garden and across the wider Admiralty area. Over the past decade, we've seen sustained growth in our Chinese Mainland portfolio, which now contributes 40% of our attributable gross rental income. This contribution has been significantly enhanced by the acquisition of the remaining 50% in Taikoo Li Chengdu earlier last year. As in Hong Kong, Chinese Mainland retail malls, our 6 malls, performed extremely well. Retail sales have exceeded prepandemic levels for most of the malls. And overall attributable retail sales were up 46% year-on-year, and occupancy rates remain high across the entire portfolio. And attributable valuation increased by 10% in 2023. The Chinese Mainland office, the portfolio was stable in our 3 core markets in Guangzhou, Shanghai and Beijing. And then looking ahead, as far as our pipeline in the Chinese Mainland is concerned, we'll be continuing to expand our retail footprint from 6 to 10 malls in the Chinese Mainland with GFA almost doubling in the next few years, thanks to our strong pipeline of new projects in Sanya, in Beijing, in Xi'an and in Shanghai. In Miami, we also saw a strong performance last year in 2023. Retail sales were up 13% year-on-year, and occupancy increased to 100%, thanks to the team's efforts to deliver on our plans to improve the trade mix at Brickell City Centre. Then moving to our residential trading portfolio. We're building an increasingly diverse pipeline across all key markets with expected completions, 8 projects extending over the next 5 years and beyond. With the New Bund and Yangjing riverside projects, we're pleased to have made a good start in Shanghai. As you'll recall, in early 2023, we acquired an interest in a prime residential site in a core area in Bangkok, and we continue to explore new residential opportunities in Southeast Asia. So for the hotel portfolio, after a very challenging couple of years, I'm pleased to report that our hotel business has also enjoyed a strong recovery. Hotels in Hong Kong and the Chinese Mainland have benefited from the border reopening, and our 2 hotels in Miami continued to perform well. In addition to The House Collective's plans for new hotels in Tokyo and in Shenzhen, we recently announced the latest exciting House Collective property in Xi'an. And meanwhile, in Hong Kong, we were very proud of the team at The Upper House, which was ranked fourth on the World's 50 Best Hotels list. So at this point, I'll hand over to Fanny to take us through the financial highlights as well as the updates on ESG and digital transformation.

Thank you, Tim. The company did very well in 2023. Total underlying profit increased by 33% to $11.57 billion, mainly due to the significant gains from the disposal of 9 floors of One Island East. Recurring underlying profit also increased by 2% to $7.285 billion. This primarily reflected strong recovery of our retail and hotel businesses in Hong Kong and the Chinese Mainland, following the lifting of pandemic-related measures and the reopening of the borders. Property trading incurred a small loss because of the sales and marketing expenses for some of the new residential trading projects. Moving on to the performance of our investment properties. Total attributable gross rental income, GRI, in 2023 was $15.205 billion, 8% increase. Attributable GRI from Hong Kong office decreased by 3% to $5.772 billion. Against the backdrop of increased vacancy in the market and uncertain economic condition, performance of our Hong Kong office remained resilient with solid occupancy due to our high sustainability standards. Hong Kong retail recorded a strong recovery. Attributable GRI increased by 14% to $2.638 billion. Sales have returned to prepandemic levels in some of our malls with higher turnover rent. For Chinese Mainland retail, attributable GRI increased by 20% to $5.101 billion. Foot traffic improved significantly, and retail sales have strongly exceeded prepandemic levels for most of our malls. Disregarding the renminbi depreciation, attributable GRI increased by 27%. The increase also reflected additional rental contribution from the acquisition of the remaining interest in Taikoo Li Chengdu. Performance for Chinese Mainland office was stable. Attributable GRI reduced by 1%. Disregarding the renminbi depreciation impact, there was an increase of 4%. The company declares a second interim dividend of $0.72 per share, making the full year dividend of $1.05 per share, a 5% growth as compared to that of last year. We do have a good track record of annual dividend growth. For the past 8 years, we did deliver dividend growth in each year, and the compound annual growth rate over this period is 5.7%. It remains our objective to deliver mid-single digit annual growth in dividend. Our investment property valuation at the end of 2023 was $281.271 billion, increased by 4% from that at the end of 2022. Two key highlights here, a significant portion of the increase, $15.23 billion, was due to the consolidation of the value of investment properties of Taikoo Li Chengdu upon the complete acquisition of its remaining interest. There were fair value losses of $2.829 billion, mainly from office investment properties in Hong Kong. There was no change in the capitalization rate for our core retail and office properties in Hong Kong and the Chinese Mainland. Moving on to the net debt. Total net debt increased from $18.947 billion at the end of 2022 to $36.679 billion at the end of 2023. This significant increase in net debt was mainly due to a few key strategic investments, including the acquisition of 40% equity interest in each of the Shanghai Yangjing and New Bund mixed-use projects, the investment in the joint venture for the Thailand residential trading project and the acquisition of the remaining 35% of Taikoo Li Chengdu as well as the consolidation of its net debt of $2.466 billion. Gearing ratio at the end of 2023 was 12.7%. Despite the significant increase from the end of 2022, the absolute gearing was still low compared with the historical levels before 2018. Overall, still very healthy balance sheet to support our investment plan and dividend growth. A few highlights here. Maturity profile is very well spread over the next 5 years. In 2023, we issued a few renminbi bonds and entered into a few renminbi loan facilities. Renminbi debt increased significantly to 30% of our debt portfolio, providing effective hedging to our investment in the Chinese Mainland. Our credit rating remained unchanged at A2 under Moody's and A under Fitch. At the end of 2023, total capital commitments were $25.215 billion. Capital commitments for Hong Kong were mainly in relation to the CapEx for the redevelopment of Zung Fu and Wah Ha buildings, Six Pacific Place and Taikoo Place. Key capital commitments for the Chinese Mainland included CapEx for Taikoo Li Xi'an, Taikoo Li Sanya and INDIGO Phase 2. Please note that these capital commitments are spread over the next few years, with majority to be spent after 2025. Moving on to sustainability. In 2023, we launched our community campaign, Sustainability We All Count, with a new theme, For Our Future. On sustainability indices, we continue to make significant progress. In 2023, we advanced to globally #2 position in the Dow Jones Sustainability World Index. We continued to rank #1 in the Hang Seng Corporate Sustainability Index for the sixth consecutive year and maintained our global leader title under the GRESB for the sixth consecutive year. We also received a number of awards for our exceptional sustainability performance, including at the Hong Kong MA Sustainability Award. Swire Properties received the Grand Award. On green financing, Swire Properties has won the Best ESG Issuer and the Best Sustainable Finance Deal at the FinanceAsia Achievement Awards 2023. In terms of our progress on our 1.5 degree-aligned Science Based Targets, we continue to make good progress. We reduced 29% of our absolute Scope 1 and 2 carbon emissions in 2023 against the 2019 baseline, whilst we observed an increase in carbon emissions due to business rebound after COVID. We continue to drive our carbon emissions through the adoption of innovative low-carbon technologies and management practices and invest in renewable energy procurement. Our trial of the PEDF project at Taikoo Li Sanlitun has allowed us to utilize our on-site renewable energy generated more efficiently, which is estimated to save up to 200,000 kilowatts per annum. This pilot has received an honorable recognition as the Top 10 Building PEDF Best Practices Award in the Chinese Mainland. We continue to demonstrate our efforts to advancing the low-carbon transition of our building stock. 17 of our buildings received the Hong Kong Green Building Council's Zero-Carbon-Ready Building Certification. Both One Taikoo Place and Two Pacific Place received a super low performance rating for both landlord and whole building portions. Moving on to tenant engagement. The Green Performance Pledge, GPP, continued to gain momentum. By the end of 2023, 90 office tenants, representing 41% of the occupied lettable floor area had signed up to work with us to drive greener office operations. We also launched the GPP Academy to help tenants and employees to drive improvements in overall energy, water and waste reduction performance. Our Green Kitchen initiative also achieved a significant milestone by soliciting 107 F&B tenants across our Hong Kong and the Chinese Mainland portfolios. Committed to the initiative, among the awarded outlets, 35 have achieved the highest Three-Leaf rating. On supply chain management, we've become the first real estate company in Hong Kong and the Chinese Mainland to launch supply chain sustainability engagement program through the EcoVadis' proprietary ESG assessment platform. We have continued to innovate and create market-leading digital solutions for our business. For our malls in Hong Kong, we have successfully launched the new Mall Dollar program, which enables members to enjoy an enhanced loyalty points earn and burn experience through our mobile apps. For our malls in Chinese Mainland, we have also launched 2 digital solutions to deliver new in-mall customer experience. The first one is a series of AR gamification campaigns to drive footfall and improve tenants' and customers' engagement. The second digital solution is an upgraded VIP digital touch point which enables our VIPs to directly reserve a section at our VIP lounge and order F&B. It also enables our staff to better personalize our VIP experience and automate lounge operation to drive productivity. We also continue to invest in best-in-class emerging technologies and funds in order to keep abreast of the latest tech development. An example in our investment in Series B for Dajie, an AI construction robotics software company, specializes in optimizing prefabrication of complex building components, and the trial of this tech solution at Two Taikoo Place. We will continue to work with Dajie and other partners to scale adoption and standardization of AI and advanced robotics in design and construction across our upcoming projects in the Chinese Mainland. With that, I pass it back to Tim.

Great. Thanks, Fanny. Okay. So the final slide just on the outlook. I think in summary, we have put the pandemic behind us, and we're optimistic about the outlook for the year ahead, thanks to the resilience of our colleagues, the quality of our developments and the diversity of our growth pipeline. Despite the subdued market conditions in Hong Kong, our office portfolio has outperformed the market and maintained high occupancy levels, thanks to the ongoing flight-to-quality trend and our successful placemaking efforts combined with our industry-leading ESG performance. We are confident that retail sales will continue to improve as travel and tourism activity recovers. And meanwhile, we are upgrading the trade mix and improving the overall retail experience for local shoppers and for tourists in Hong Kong. On the trading front, we have a diverse portfolio of residential projects in Hong Kong, and we look forward to a gradual recovery as market sentiment improves, following the government's relaxation of the cooling measures. In the Chinese Mainland, the recovery of our malls will continue, and we anticipate a period of near-term market stabilization and longer-term steady growth for our investment property portfolio. Meanwhile, we're taking an opportunistic approach to expanding our interest in Southeast Asia, and we anticipate the outlook for our hotel business will also continue to improve in 2024. So to finalize, we have a balanced and diversified portfolio with strong fundamentals supported by active asset management and a transformative placemaking strategy. We have made excellent progress with our $100 billion investment plan in 2023, and we will maintain our commitment to deliver sustainable annual dividend growth. Thank you very much. And I think we've got probably a little bit of time to take a few questions.

Yes. Thank you, Tim and Fanny for the detailed presentation. We'll now open the floor to questions. As the briefing is currently on webcast, please raise your hand and wait for the mic before your questions. Please let us know your name and organization, and please ask no more than 2 questions at a time. Now I'll take the first question, gentleman in the middle.

This is Karl Chan from JPMorgan. So I have 2 questions. My first question is about the Mainland Chinese retail because it seems like just now in the outlook presentation slide, it seems like our tone is getting a little bit more conservative, right? Because after a very, very strong tenant sales last year, seems like we are guiding a stabilization for this year for Mainland Chinese retail. Just curious if you can elaborate a little bit more on that. Are we seeing -- are we still expecting the retail sales to still see like a positive growth this year? And in terms of rental reversion, how are we looking at this year? And if it's possible, can you share a little bit more about the colors on the retail sales so far this year? So my first question is on the Chinese Mainland retail. And the second question is about the Hong Kong office, which I think that we all know that is still under some pressure. Just curious in terms of the rental reversion, I guess, we are still looking for maybe a downward reversion, but then in terms of the magnitude, do we see that it may narrow a little bit this year in 2024? So that's my 2 questions.

Okay. Thank you, Karl. Thanks for your questions. Well, as you say, Chinese Mainland retail, as you've seen in the slide, performance, the recovery in 2023 was exceptional. And I think we all know in the Chinese Mainland, the performance of the retail malls was particularly strong because of the captured demand. And we think that the general trends will continue. We think our retail malls are very well positioned and we see demand from -- in the cities in which we are located. I'd say that in the Chinese Mainland, we will -- we do expect a period of relative stabilization, a sort of a more steady and more sustainable rate of growth of retail sales. It's probably sort of mid-single digits in 2024. And rental reversions, I mean, subject to the trade mix, we expect them to be positive. As far as the -- as far as Hong Kong is concerned, sorry, let me finish on that. So as part of your question on year-to-date and can we give any color, I mean, I think the kind of the really positive thing is across all our malls in the Chinese Mainland and also actually in Hong Kong, we're seeing really strong footfall. And particularly over Chinese New Year and the Valentine's Day holidays, footfall, in some cases and in some malls, reached all-time record levels. So the question then is around conversion of footfall to sales. Hong Kong, we've continued to see steady growth. Chinese Mainland, I think domestic travel was very strong during the holiday period. And that has sustained the retail sales growth. I think it's still a little bit early to say because the January, February periods, with the various holidays, it's quite difficult to make the comparison year-on-year. But the general sentiment is positive for our malls in the Mainland. Your second question was on Hong Kong office, I think, on reversions. I think the numbers we've shown is negative reversions have continued in Pacific Place, negative, about 12%. And in Taikoo Place, if you split it, well, on an average basis, negative reversions around 6%. But if you look at the newer towers, so One Island East, One Taikoo Place, actually, reversions have been flat or, in some cases, slightly positive. For the older office towers, we've seen negative reversions around 10%. So in terms of the outlook for the year, I think there will be -- there's quite a lot of new supply coming into the market in Hong Kong. Vacancy rates are at historical highs. And so we think there will still be pressure on office rental, and we assume that may be the sort of 5% for the year ahead.

Thank you, Tim. Turning to the next question, gentleman here, second row. Thank you.

Karl Choi from Bank of America. You've got a couple of, I think, investment properties are being completed in 2025 in Sanya and Shanghai. Just in general, curious about your preleasing discussions with some of the retailers. Given some of the macro backdrop, what's the interest level? And also I noticed your comment about wanting to double the GFA in Mainland China. [ I think that is ] by 2032. It was quite specific. And I think just curious, previously, you signed some MOUs with local governments, and it doesn't mean that we're getting close to maybe perhaps some arrangements in the next year or so.

Thanks, Karl. Well, I think the projects that you mentioned in Sanya and in Xi'an, in fact, we've been in discussions with tenants for some time. And they're both very unique sites, and we wanted to start those discussions early on. There's a lot of enthusiasm and a lot of optimism for both those projects. I think as far as Sanya is concerned, we're in partnership with the China Tourism Group, who have an existing mall in Haitang Bay. And I think we've seen very strong retail sales over the last couple of years and a very strong start to 2024. So I think that as far as our discussions with the brands are concerned and with the tenants concerned, there's a lot of enthusiasm, and we will be working very hard to, as you see it in the slides, to try and open that project in phases so the brands can get themselves set up in Sanya as quickly as possible. Similarly, in Xi'an, we'll be working with brands and partly in conjunction with -- to meet sustainability objectives. But we're trying to get some of the brands established as early as possible, but -- so we can also open in phases. So discussions with tenants is ongoing. The project in Shanghai that you mentioned is adjacent to Taikoo Li Qiantan. And as you know, there's been a very successful start for that project. And a lot of the brands are looking for either for expansion space, or brands that are not already in Taikoo Li in Qiantan are keen to take space in that project when we start to open it. So we're in -- the discussions are moving along positively. As far as the strategy to grow our retail footprint in the Chinese Mainland is concerned, I mentioned earlier that we're looking at opportunities in the Greater Bay Area. We are in discussions, and we've announced an MOU that we signed with the Guangzhou government for a second project in Guangzhou. Those negotiations are progressing positively. And we hope in the next few months, we may be able to announce some more details of -- or further investment in Guangzhou.

Thanks, Tim. Turning to the next question, gentleman here, second row.

This is Mark Leung from UBS. I have 2 questions. I think the first one is still a follow-up on the China retail side. So I think in the announcement, we are -- management mentioned we see the luxury tenant space demand in Beijing and Shanghai has taken a prudent approach. I just want to check, how is the impact on our project competition? I think that's the first one on the China retail. And then, I think, another thing is on the Shanghai or Beijing, Sanlitun and Shanghai, basically our Taikoo Li site. I think these 2 more, we are seeing some maybe AEI plan or maybe we call it tenant mix upgrade. I am not sure it can be -- can you give us more colors about that? And the second question is regarding on the dividend. It is -- I think it is really nice, and I love to see the dividend continue to grow by about 5% in this year. Just wanted to check again, what is our comfortable net gearing level in the long run?

Okay. Thank, you Mark. Well, look, as far as the brands are concerned, clearly, there is an element of conservatism around the selection of locations for new stores. And we've seen some consolidation of their interest in the Tier 1 cities. Certainly, as far as Sanlitun is concerned is, if you've been up there recently, there's a really exciting transformation in Sanlitun in the North. And that's -- you'll see from the holdings, all the sort of major luxury brands are making a substantial commitment and a huge investment in Taikoo Li in Sanlitun, which is incredibly exciting, and we look forward to that sort of ongoing transformation in Taikoo Li. And I think that's probably sort of consistent to the second part of your question is that the Taikoo Li format has been very well received. It's performing extremely well for the brands. Our customers really enjoy that. It's attracting a younger customer, a younger demographic, and it provides a very unique retail experience for customers. And we're confident that as we continue to innovate, continue to develop new Taikoo Lis in the Chinese Mainland that, that success will continue.

On the dividend and the gearing question, I think we are very comfortable with the current gearing ratio, which is only low-teen percentage. Our expectation is that it will remain between the low-teen to the mid-teen level in the next 1 to 2 years. And is there any limit that we don't want to go across? I think in order to maintain our current credit rating, which is our objective, it has to be below 20%. So we still have quite a lot of room in order to support our investment plan and also our dividend growth.

Thanks, Tim and Fanny. In the interest of time, we will take the last 2 questions. Gentleman here.

It's Ken from Citi. First question, I want to ask about your $100 billion investment plan. When you first talked about this, I think around 2 years ago, I'm quite surprised that you have done this -- already 60% done. So how do we see this? This is a 10-year plan. We are 60% already committed in 2 years' time. Should we be seeing some of the upside on that probably on this $60 billion? And also on the allocation is China, you've already done quite a lot. And basically just $10 billion left. Are we seeing -- and you mentioned about some maybe Guangzhou, all these things. Should we see some further allocation between on this $50 billion, $30 billion, $20 billion split on your $100 billion plan? And I think the second question is on Fanny on the CapEx. You see $5 billion are probably under construction. More project taken up is going to go up further. So together with rising dividend, are we potentially seeing a negative cash flow situation on that? And how should we deal with it? Probably maybe noncore disposal that kind of things we can think off, but what else we can sell?

Okay. Thanks, Ken. Well, Ken, you're right. So we announced the $100 billion plan in, well, exactly 2 years ago as we started to have greater visibility and greater confidence of the projects that we were seeing that were complementary to our long-term strategy in all our core markets. And I think we're very pleased that we've been able to make the progress that we have been able to make, particularly, as you say, in the Chinese Mainland. Some of that has been being opportunistic as market conditions have allowed us to make those investments, for example, the 2 projects in Shanghai, which we announced at the end of last year. And so there has been an element of front-loading to the $100 billion plan, but it's still a long-term plan. We'll still remain extremely selective about the sites that we think are fit for our portfolio and that meet the requirements of the 2 brands that we've developed in the Chinese Mainland, being Taikoo Hui and Taikoo Li. I've talked about the 2 cities that we're particularly interested in, 1 being in Guangzhou and 1 being in Shenzhen. And I think at that point, we'll be comfortable with our position in the Chinese Mainland and our coverage in the key cities that we have selected. And then there will naturally be maybe a tapering-off of activity. But we have -- we still have quite a lot to do in terms of the execution of the plan, and that will take us at least the next 4 or 5 years. So we're not planning to change the allocation. We think it's appropriate. We think it's appropriate for our plans in the Chinese Mainland, and it will help us deliver on our retail-led strategy. We think it's appropriate for Hong Kong and our ambitions for Taikoo Place and for Pacific Place. And then as far as Southeast Asia is concerned, again, that's a long-term ambition we have. So we've allocated $20 billion to trading opportunities and specifically to allow us to develop a footprint in those 4 markets in Southeast Asia that we've talked about.

And your question on the cash flow, I think the -- of the -- well, almost 60% commitment that we have, quite a lot have been paid. So our future unpaid capital commitment remains not very significant. And then if you look at our capital commitment plans, you can see that for the next 1 to 2 years, we are only talking about $10 million, of which, $5 million each year, kind of. And then the other thing is if you look at the future cash flow, with the increased GFA and also new investment coming online, for example, like the Two Taikoo Place and Six Pacific Place, they will contribute additional rental to our portfolio. And also Tim talked about the residential pipelines. We have a very strong residential pipelines, and many of them will start to contribute to cash flow starting from 2025 onwards. And then one of which is the project -- the new project that we have in the Shanghai, which is the New Bund project, which we got quite a good selling result. So 2025 will be the year that we can recognize the profit. So with the new investment contributing additional income, rental and profit, and I think we are very comfortable. That's why I mentioned about in the next 1 to 2 years, we expect that the gearing will be remaining on the low-teen to mid-teen level then.

Thanks, Tim and Fanny. If there's no further questions, this will conclude our analyst briefing today. Thank you very much for joining us.

Thank you.

Thank you.