Thank you, Tim and Fanny, for the presentation. We now proceed to the Q&A. Please submit your questions in English in the question box at the bottom right of your screen. Please pose no more than two questions at a time. Now, I will read out the first question, which is about our investment in Xi'an. Why did you choose Xi'an despite a preference for investment in Tier- 1 cities? Did local government invite you to invest?
Okay, well maybe I'll take that one, Fanny. As I mentioned, you know, we're very excited about this opportunity in Xi'an. Our strategy in the Chinese mainland has been to look for opportunities in Tier- 1 cities and emerging Tier- 1 cities, but also to look for locations which have special or unique qualities. We think that this site in Xi'an really fits that bill. The city has a large population. It has, specifically, a very large student population, and we think this site is ideally suited for our fourth Taikoo Li in the Chinese mainland. I think, you know, we've had a really encouraging experience with our recent opening at Taikoo Li in Shanghai and in Chengdu.
We've learned a lot over the last 10 years about this evolving concept, and we think Taikoo Li concept is ideally suited for Xi'an.
Thank you, Tim. Moving to the next question is from Kyle from BofA. It's about our HKD 100 billion investment program. How does Swire come up with the HKD 100 billion Hong Kong dollars investment program, and how about the financial capacity or projects already line up? Does Swire intend to do a lot more disposals to fund the investments?
Fanny, do you want to take this question?
Okay. Thank you, Kyle, for the question. How do we come up with the HKD 100 billion investment? I think, in many previous meeting that we had, we always mentioned about we have been working with, quite a lot of investment pipelines in our core market, Hong Kong, Chinese mainland, and also exploring opportunities in Southeast Asia. It shouldn't come up too much as a surprise to, the market then. We do have a strong pipeline, and, I think amongst the pipeline, we are confident that, HKD 100 billion investment will be very likely to happen, particularly in the next five years, which we hope to deliver the result for that. Do we have the financial capability to do so? I think, the answer is quite obvious.
In the slide, I mentioned that over the past five years, we generated HKD 43 billion cash from our capital recycling program in order to strengthen our balance sheet so that we can have the capacity to put the money into the new investment opportunities. On top of that, I think capital recycling will still be our active part of our active asset management strategy. Of course, the magnitude will be largely reduced now that we have substantially disposed of quite a lot of the non-core investment. I think with our balance sheet, we can still take care of the HKD 100 billion investment within our capacity, and we will still be aiming having all these investment completed within our goal to achieve our current investment grade credit rating.
Also continue to deliver the mid-single digit dividend growth to shareholders.
Thank you, Fanny. The next question is about our dividend policy. It's by Mark from UBS. As we guided a mid-single digit DPS growth per annum, does it mean the 50% payout ratio policy no longer remain valid?
Fanny, do you want to take that one as well?
Okay. Thank you, Mark, for your question. I think we still stick to the roughly approximately 50% of our underlying profit to be distributed out. Another way to look at that is, I think we are confident that the new investment will be able to generate sustainable profit contribution so that it can support the mid-single digit dividend growth in the future.
Thank you. The next question is from Ken from Citi. There's two parts in the question, so I will first read out the first question. What is your outlook of your Chinese mainland mall tenant sales performance for 2022? Are you seeing mall tenant sales as peaking out in the fourth quarter in 2021?
Thank you, Ken. Well, I think as you mentioned in the presentation pack, retail sales in the Chinese mainland have been very robust last year, certainly over the last twelve months. We've seen a 30% growth year-on-year. I think you're right, we saw some slight slowdown in the second half, particularly in the fourth quarter, largely due to you know, sporadic outbreaks of the pandemic of COVID-19 in the Chinese mainland, but the government has moved very swiftly to address those. And we've seen a pretty quick rebound each time there has been a lockdown in each of the cities in which we operate. We're still optimistic about the outlook for this year.
We still see strong growth opportunities in the Chinese Mainland across all our retail centers.
The second question from Ken is that for on Two Taikoo Place, how is the pre-leasing status, and what's your target committed occupancy by end of the year?
Thanks, Ken. Well, I mean, we're making really good progress in Taikoo Place. Two Taikoo Place will be handed over in the second half of this year. It's too early at this stage to give you much more information on further commitments. We announced, you know, the really exciting news of a major financial tenant last year as an anchor for Two Taikoo Place. Despite the softer market in the first quarter of this year, we're seeing plenty of activity, plenty of interest in Two Taikoo Place. I think which reflects the ongoing trend of decentralization. It reflects the ongoing flight to quality to our, you know, very high quality buildings.
I think, you know, the interest in Taikoo Place is only growing as tenants and occupiers' interest in wellbeing and smart buildings increases. I think we still remain very optimistic that we'll achieve, you know, our targets by the year end, and we should have more information for you at the interims.
Thank you, Tim. Moving on to next question. It's by Avery from J.P. Morgan. Given gearing is at such low level, apart from the HKD 100 billion investments, does the management has any plans to do share buybacks?
Yeah. Thank you. Fanny, do you want to take this one as well?
Yeah. Thank you, Tim. Thank you for the question. Yes, our gearing is very low, and we have the capacity to do HKD 100 billion investment. Share buyback is always one of the choice of capital deployment, which is in our agenda. Our preference is to put money into the new investment pipeline so that it can generate a sustainable profit contribution in the future and in turn to support our mid-single digit annual dividend growth. I think this is still in the pipeline or in our, well, agenda to consider the share buyback, but we prefer to put money into the new investment first.
As Tim mentioned, at about, hopefully, in the first five years, the HKD 100 billion investment pipeline, most of that will be spent on the new investment. I think that is our overall position on the capital allocation.
Yeah. Thank you, Fanny. Just I think, you know, just to add to that, I think it, you know, is reflective of the confidence that we have and the quality of the pipeline of projects that we've identified. As Fanny says, our focus at the moment is to deliver and to execute on the HKD 100 billion investment.
Thank you, Tim. In the interest of time, we will take two more questions. This question is from Simon from Goldman Sachs. Given the current COVID-19 pandemic situation, how would you quantify the potential impact of rental concession?
Thank you, Simon. Well, I think it's still too early to say what the situation is in 2022. As I mentioned earlier, we moved swiftly to provide support to the tenants that we felt, you know, needed the most support, those who had faced closures, mandatory closures, in the first quarter. I think, broadly, our assumption is that, based on what we know today, the concessions in 2022 will be approximately 50% of the concessions that we granted last year. As I say, the outlook is still uncertain and we'll work very closely with our tenants to support them through this period of time.
Thank you, Tim. We have the last question. With the strong performance of retail market in China, especially from luxury brands, do you see opportunities to upgrade your malls?
I think. Thank you for the question. I think, you know, our retail malls in the Chinese Mainland are very well positioned in each of the cities in which we operate. They've all established themselves as retail destinations. We're seeing, you know, good opportunities as you say to upgrade them. I think, you know, a portion of our malls will definitely be upgraded. We have strong relationships with, you know, all the major luxury brands.
You know, as I mentioned earlier, I think the successes in Taikoo Li Qiantan have really kind of accelerated our ambition to you know, to upgrade and to continue to improve the quality of our malls in the Chinese Mainland in response you know, to the consumer demand, and we're seeing really strong demand for luxury goods.
Thank you, Tim and Fanny. That concludes our briefing today. Thank you for joining us.