Swire learns lessons as it builds a business

Developer looks to residential sector and second-tier cities to promote further growth

When Swire Properties, a Hong Kong-based developer of mixed-use commercial properties, established its office in Guangzhou in 2001, it also began construction of its first commercial project on the mainland.

However, it took almost 10 years for the company to finish TaiKoo Hui, a flagship property for the company on the mainland. It covers a total gross floor of 358,000 square meters and consists of retail and office elements, a hotel and a cultural center.

"It took too long for us to finish the project. We made some mistakes during that period," said Guy Bradley, CEO of Swire Properties Chinese Mainland.

Bradley called TaiKoo Hui "a learning project" for Swire Properties, saying: "I think every company has a learning project after it comes to China."

Early media reports said the company encountered problems in negotiations with the local government on building a subway station at TaiKoo Hui.

"Something must have been wrong with the Guangzhou project because both people from the partners and our teams and government officials involved in the project changed positions over the last decade. We didn't know how to be more effective locally at that time," Bradley said.

Swire Properties has a 97 percent stake in TaiKoo Hui, which is located in the Tianhe central business district of Guangzhou, the capital of Guangdong province.

"The only good news is that we bought the land for a very low price 10 years ago. We need to make sure we will not repeat the same mistakes in our future projects," he said.

Learning from the project, Swire Properties has changed its business model, now teaming up with local developers. "The operation enables us to use the expertise of both sides to complete projects more quickly and more efficiently," he said.

The company's two new projects - Beijing Indigo and Chengdu Daci Temple - are joint ventures with domestic developers Sino-Ocean Land. And another Shanghai project is a joint venture with HKR International.

"The latest project Indigo, which just opened in Beijing last year, took less than four years to complete. The Chengdu project will be finished this year. We bought the land at the end of 2010," Bradley said.