Good afternoon, ladies and gentlemen. Welcome to Swire Properties' 2024 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 2024 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 last year? Please enjoy. Hope you all enjoyed the video. May I now invite Tim and Fanny to walk us through the presentation? Tim, please.
Great. Thank you very much. Good afternoon. Welcome again to the Swire Properties Annual Results Briefing for 2024. As you can see from the video, it's been a very busy year on many fronts. As usual, I'll take you through the strategy and the results, highlight the progress and key developments across our core markets and the portfolios. I'll provide you updates on those, while Fanny will cover the financial and sustainability highlights for 2024. I'll close with some brief comments on the outlook for the year ahead. That should leave some time for Q&A as well. Overall, our results in 2024 were solid despite market headwinds.
We reported a recurring underlying profit of HKD 6.5 billion, which is a decrease of 11% year-on-year, mainly reflecting higher net finance charges and a reduction in office rental income here in Hong Kong, partly due to the rental loss from the disposal of nine floors at One Island East in Taikoo Place. The attributable gross rental income was down slightly, 2% year-on-year. The company has declared a full-year dividend per share of HKD 1.10, which is up 5%, consistent with our commitment to enhancing shareholder returns and delivering mid-single-digit annual growth in dividends and paying out approximately 50% of underlying profit in ordinary dividends over time. In August 2024, we also announced a share buy-back program of up to HKD 1.5 billion. At the end of the year, approximately 50% of that program had been successfully executed.
One of the highlights in 2024 was the achievement of the number one ranking in the global Dow Jones Best-in-Class World Index, reflecting the hard work the team has put into achieving the SD 2030 vision and six years ahead of time. Fanny will talk a bit more about this in a moment. With a strong balance sheet, healthy gearing ratios, the business is on a solid financial footing. We're well placed to achieve our long-term growth targets thanks to the active capital recycling strategy, diverse development pipeline, and value-accretive asset reinforcement opportunities, combined with continuous retail upgrading plans in Hong Kong and across the Chinese Mainland. Since the interim's last year, there have been several key developments.
In August, I updated you on the strategic significance of two investments in the Greater Bay Area at Taikoo Hui, the cultural center expansion, and the recently announced Taikoo Li Julong Wan in Guangzhou as well, as well as the acquisition of an additional 15% in Taikoo Place, Beijing, together with our new partner, China Life. In December, we launched the first batch of residential pre-sales at Lujiazui Taikoo Yuan Residences in Shanghai, which was extremely well received by the market, achieving among the highest prices in the Pudong primary residential market. We are preparing for further launches in 2025. This slide just summarizes the strategies to drive long-term shareholder value. We have a strong track record of capital recycling, providing liquidity to support the investment plans and to drive growth in the future.
In terms of capital allocation, we've made good progress over the past three years with our plans to invest HKD 100 billion across the three core markets, with 67% now committed. We are on track to double our GFA in the Chinese Mainland by 2032 to achieve a more balanced portfolio mix between retail and office, which will support the long-term aim to deliver a mid-single-digit annual growth in dividends. As I mentioned, last August, we announced the share buy-back program. This is a new slide that just illustrates the successful progressive execution of our capital recycling plans since 2018, with cumulative disposal proceeds of over HKD 51 billion as at the end of last year, which provide a solid foundation for growth.
We'll continue to explore non-core divestment opportunities in combination with our plans to upgrade, improve, and continue to transform our core portfolios, consistent with the flight-to-quality trend, which we see in the market. You will be very familiar with this slide from previous briefings, but it is essentially a summary of the HKD 100 billion investment plan to drive our long-term growth and providing a detailed breakdown of the allocation of capital by project. You will see a couple of the new projects indicated in the chart. We have made steady progress, as I said, with 67% now committed and providing a clear roadmap for growth. In terms of upcoming projects, we are focused on maintaining a balanced portfolio with a strong pipeline across all markets. The slide illustrates the project completion schedule for new projects over the next five years.
Notably, in addition to the continuation of our retail-led strategy in the Chinese Mainland, we also have a diverse pipeline of residential trading projects in key markets, including Shanghai and in Southeast Asia. I'll just pause for a moment on this slide. Since we met at the interims, obviously, we finished the last phase in the transformation of Taikoo Place. This is a bird's-eye view of Taikoo Square and the elevated walkway system, which is the heart of the latest phase in the transformation of Taikoo Place as a global business district. Hong Kong Office, well, the office market in Hong Kong, as I said earlier, remains soft due to the oversupply and the lack of new demand.
Nevertheless, we have maintained steady overall occupancy of 93% across the office portfolio, outperforming relevant sub-markets and consistent with the flight-to-quality trend, thanks to our commitment to placemaking, our sustainability credentials, and numerous tenant engagement activities. Occupancy at Pacific Place was at 95%. In Taikoo Place, occupancy at One Island East and One Taikoo Place increased to 94%. Occupancy across the other Taikoo Place towers was at 91%. Occupancy at our newest completed Grade A office at Two Taikoo Place is rapidly approaching 70%, which is an encouraging milestone given the subdued market conditions. However, negative rental reversions reflect the prevailing economic environment, and we'll continue to focus on occupancy and retention given the uncertain market outlook. Attributable gross rental income was down 6% year-on-year, or that's 4% if we disregard the impact of the disposal of the nine floors in One Island East.
Hong Kong Retail, again, despite the macroeconomic uncertainties, the retail portfolio performance I described as resilient. Occupancy at Pacific Place, Cityp laza, and at Citygate Outlets was at 100%. Retail sales growth was slightly down across the three malls, reflecting changing consumer behaviors, reduced tourism activity, and also tenant upgrading works at Pacific Place. Attributable gross rental income was down 3%. In the Chinese Mainland portfolio, we describe it as a strong engine for growth. Since 2015, we have seen a sustained growth of our portfolios in the Chinese Mainland, which now contributes over 40% of our attributable gross rental income. Over the long term, we anticipate a balanced contribution between our Chinese Mainland and Hong Kong portfolios.
Sticking with the Chinese Mainland, six new projects under development and our six existing malls are well positioned to increase market share thanks to this constant process of asset reinforcement. We have been making good progress in Beijing, Shanghai, Guangzhou, and Chengdu, with major works underway to upgrade the trade mix, supported by a wide variety of tenants, including the global luxury brands. In the Chinese Mainland, retail sales growth has stabilized in the fourth quarter of 2024. With the exception of Taikoo Li Qiantan in Shanghai, which reported positive sales growth last year, overall retail sales declined by 7%. Taking into account the high baseline set in 2023, the increase in outbound travel, especially to Japan, and lower opening rates due to upgrading works in Shanghai, Beijing, and our Chengdu malls.
On a like-for-like basis, excluding Taikoo Li Qiantan, retail sales remain significantly higher than pre-pandemic levels in 2019, and footfall encouragingly continues to increase. Attributable gross rental income was up 4% in Renminbi terms, 2% in Hong Kong dollar terms, and occupancy rates remain high across the portfolio. Just a few photos here to demonstrate or to illustrate the scale and the significance of these trade mix upgrades undertaken in 2024 and highlighting the quality of the new concept and first-in-the-city and first-in-China stores at Taikoo Li in Chengdu and also in Taikoo Li Sanlitun. Last year, over 60 brands opened new stores or upgraded concept stores in Chengdu alone, while in Beijing, the completion of the luxury flagship stores for major international brands represents a transformational repositioning of Taikoo Li Sanlitun North.
Moving to Chinese Mainland Office, the performance of the office portfolio in the Chinese Mainland was steady. Attributable gross rental income was up 1% in Renminbi terms, and we remain exclusively focused on core locations within our mixed-use developments in Guangzhou, Shanghai, and in Beijing. For the Chinese pipeline, over the past three years, we built solid foundations for growth, especially for our retail-led investment property portfolio, GFA almost doubling over the next five years, thanks to the combination of asset reinforcement opportunities for the existing malls and the strong pipeline of new integrated mixed-use investment properties under development. In Miami, the mall at Brickell City Centre has performed well. Retail sales are up 3% year-on-year. Occupancy also at 100%. Attributable gross rental income was up 9% as a result of the enhanced retail trade mix. I will say the outlook remains positive for retail in Miami.
Turning to residential, we currently have a diverse pipeline of 11 projects. You can see the breakdown on the right-hand side of this slide. Diverse pipeline of 11 projects across our main targets, our main markets in Hong Kong, Shanghai, and Southeast Asia, with phased completions evenly spread over the next five years and beyond. This slide provides a little more detail on the residential trading portfolio here in Hong Kong. We're currently making plans to launch our latest lifestyle-focused development, The Headland Residences in the Eastern District on Hong Kong Island, where we've obtained pre-sale consent. Timing is likely to be later this year. Outside of Hong Kong, we've been very pleased by the response for high-quality prime riverfront homes at Taikoo Yuan residences in Shanghai, and we are planning for successive sales launches in 2025.
Meanwhile, sales of units at Savyavasa in South Jakarta have now exceeded 30% pre-sold, and the sales velocity is picking up as we approach handover. Also in Southeast Asia, we're looking forward to launching our prime residential project in central Bangkok also later this year. Finally, to hotels, I'll say the performance of the managed hotel portfolio in 2024 was mixed, slower than expected recovery in Hong Kong, while performance in the Chinese Mainland has been better, specifically in Shanghai. Having taken the decision mid-last year to convert The Opposite House in Beijing for luxury retail, we will continue to expand The House Collective through third-party management agreements. We're looking forward to new properties coming on stream over the next few years in the Chinese Mainland and in Japan. At this point, I'm going to hand over to Fanny.
Thank you, Tim.
This is a summary of our profit. Tim talked about that at the beginning. In 2024, our underlying profit declined primarily due to the absence of substantial profit from the disposal of nine floors of One Island East in 2023, together with a decrease in profit from the sale of car park space in Hong Kong in 2024. The recurring underlying profit also decreased by 11% to HKD 6.479 billion, reflecting higher net finance charges and lower Hong Kong Office rental income, partly due to the disposal of office floors. Our investment properties portfolio showed resilience despite the headwinds. Total attributable gross rental income (GRI) reduced slightly by 2%. GRI for Hong Kong Office decreased by 4% after disregarding the revenue loss from the disposal of nine floors of One Island East.
GRI for Hong Kong Retail decreased by 3%, reflecting negative impact from economic uncertainty, outbound travel trend, and the change of tourist spending behavior. In the Chinese Mainland, our retail portfolio achieved a 2% increase in GRI in HKD terms and a 4% increase in Renminbi terms. The good performance reflects the positive impact of the tenants' mix improvement despite disruptions from the structural and reconfiguration in three malls. The office portfolio in the Chinese Mainland had a steady performance with a 1% increase in GRI in Renminbi terms. We are pleased to announce a 6% growth year-on-year in the second interim dividend of HKD 0.76 per share. This, together with the first interim dividend amongst a full-year dividend of HKD 1.10 per share, represents a 5% increase from 2023.
This is the eighth consequential year of dividend growth, achieving a compound annual growth rate of 5.6% and an absolute growth of 55% versus that in 2016. Additionally, the board approved a share buy-back program of up to HKD 1.5 billion, which will run full to the end of the next AGM in May this year. In 2024, we repurchased 47.7786 million shares for a total consideration of HKD 750 million. The progressive dividends and the share buy-back demonstrate the company's commitment to enhance shareholders' value. The valuation of our investment properties as at the end of 2024 was HKD 271.5 billion, a 3% decrease compared to the end of 2023. This decrease reflects net fair value losses primarily from office investment properties in Hong Kong, transfer of certain properties to assets classified as held for sale, and foreign exchange translation losses from properties in the Chinese Mainland.
These were partly offset by fair value gains from properties in the Chinese Mainland and the USA. There was no change in the capitalization rate for our core retail and office properties in Hong Kong, but there was a reduction of 25 basis points in the capitalization rates for certain retail properties in the Chinese Mainland. Additions mainly reflected CapEx for Six Pacific Place, Taikoo Li Xi'an, and No. 387 Tian he Road. As at the end of 2024, our net debt increased to HKD 43.7 billion with a gearing ratio of 15.7%. This increase is within our healthy balance sheet parameters. Our financial ratios remain robust, providing a solid foundation for future growth. Our maturity profile remains well spread with a healthy balance of loan facilities and medium-term notes.
Total committed and joint facilities and cash were maintained at high at HKD 13.3 billion, ensuring healthy liquidity to support our operational and investment requirements. We continue to increase our Renminbi funding proportion, with 36% of our credit facilities in Renminbi, providing effective hedging to our investments in the Chinese Mainland at low funding cost. Credit rating remained unchanged at A1 under Moody's and single A under Fitch. Green financing ratio increased to approximately 70%, well above our 2025 target of 50%. As we advance our strategic investments, our capital commitments also increased to HKD 31.6 billion as of the end of 2024. Majority is for the investment in the Chinese Mainland, which will be incurred over the development cycle in the next four years- five years. For capital commitment for Hong Kong, they will be back-end noted and mostly payable after 2028.
Moving on to sustainability, we are honored to be recognized as number one globally in the Dow Jones Best-in-Class World Index 2024 in our industry. This achievement also means we are six years ahead of realizing our SD 2030 vision of being a global leader in sustainability. We are also pleased to add that we continue to rank number one in the Hang Seng Corporate Sustainability Index for the seventh consecutive year, and we have maintained our Global Sector Leader title under the mixed-use category for the GRESB for the eighth consecutive year. Additionally, we are proud to reach the top 1% in the S&P Global ESG Score in both the global and the China-specific editions of the Sustainability Yearbook. We are the only company in the real estate management and development industry to attain this distinction.
On decarbonization, we are well on track to achieving net zero emissions by 2050. As indicated by the Green Line, we reduced 40% of our absolute scope one and scope two carbon emissions in 2024 against the 2019 baseline. We continue to lead various energy efficiency iterations. Our PEDF projects at Taikoo Li Sanlitun, Beijing, and Taikoo Hui, Guangzhou, have collectively saved 290,000 kW electricity. Riding on the success, we are expanding the technology to Taikoo Li Chengdu, One Pacific Place, and One Citygate. On offsite renewable electricity adoption, 62% of our overall Chinese Mainland portfolio is now powered by 100% renewable electricity, achieving net zero carbon in annual electricity consumption for both landlord and tenants' operations.
Swire Properties is one of the first three developers to endorse the collaboration statement on low carbon emissions steel for real estate in China, enhancing collaboration to reduce embodied carbon emissions in the built environment. Moving on to tenants' engagement, our signature Green Performance Pledge with 129 office tenants, 53% of our occupied lettable floor area had signed it up, exceeding our 2025 target of 50%. We are also pleased to launch the tenants' portal as a one-stop platform for data monitoring and benchmarking. Thanks to the unwavering support from our office tenants, we have achieved a collective reduction of 3.8% in electricity use intensity and a 10% increase in the waste diversion rate for these tenants' offices.
Our Green Kitchen Initiative also achieved a significant milestone by soliciting over 120 F&B tenants across our Hong Kong and Chinese Mainland portfolios committed to the initiative, of which 42 have achieved the highest Three Leaf rating. In November 2024, luxury conglomerate LVMH and Swire Properties have formed a strategic partnership to improve their ESG performance across LVMH stores, offices, and F&B locations in our Chinese Mainland and Hong Kong portfolio. With that, I think I can pass it back to Tim to wrap up.
Great. Thank you, Fanny. Okay, this is the last slide. I tried to summarize the key messages from the presentation. We described the outlook as we're well positioned despite the market headwinds. I would say that our performance over the past 12 months has demonstrated the continued resilience of the business.
We're well positioned to meet future challenges thanks to the strength of the balance sheet, the quality of our properties, and the diversity of our growth pipeline. We continue to make steady progress with 67% of our HKD 100 billion investment plan now committed to build a strong pipeline to enhance shareholder returns and meet our aim to deliver sustainable annual dividend growth. On the retail front, thanks to their differentiated positioning, our three malls in Hong Kong have once again demonstrated their resilience, and we'll continue to upgrade our trade mix and invest in major events, loyalty programs, and premium customer experiences and lounges to improve the overall experience and attract shoppers and tourists alike.
In the Chinese Mainland, we anticipate a period of relative stabilization of the retail market, with the outlook slightly more positive as consumer sentiment improves and the positive impact of our trade mix upgrading is realized. Despite the soft market in Hong Kong, our office portfolio continues to outperform, consistent with a sustained flight-to-quality trend, and thanks to our successful placemaking efforts and our industry-leading ESG performance. We anticipate the overall market will remain subdued as tenants continue to exercise caution given uncertain economic times, and we will continue to focus on tenant retention in anticipation of a gradual recovery for premium office stock over the medium term. Given high vacancy rates, we expect the office sector in the Chinese Mainland to also remain subdued. On the residential front, market sentiment in Hong Kong is gradually improving.
We've seen good demand for our residential projects in Shanghai, and there is no change to our strategy in Southeast Asia, where we'll continue to focus on prime residential properties and opportunities in Jakarta, Ho Chi Minh, Bangkok, and in Singapore. We anticipate the outlook for our hotels will continue to pick up gradually in 2025, supported by the government's tourism blueprint here in Hong Kong. In summary, we have a balanced and diversified portfolio with strong fundamentals supported by active asset management and our transformative placemaking strategy. We remain committed to our long-term strategy of continuous investment in our key markets to deliver sustainable dividend growth for our shareholders. Thank you.
Thank you, Tim and Fanny. 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 two questions at a time. Gentlemen at the front, in the middle, please.
Thank you. Hello, Tim. Hello, Fanny. This is Karl Chan from JPMorgan . I have two questions. The first one is, I guess, one of the most anticipated questions, which is about the buy-back. We all know that the buy-back program will end in May. I am just curious, do you have any early indication on whether we will continue the buy-back program in the next year? That is my first question. The second question is on Mainland China Retail. I guess compared to the previous two results, it seems management is holding a more positive view on Mainland China Retail.
Just curious, let's say for the first two months of this year, what are we seeing on the ground? Are we seeing a positive tenant sales growth among our Chinese Mainland Chinese shopping malls? Looking forward into 2025, do we expect that the overall tenant sales will actually turn positive year-on-year? Would that translate into a positive rental reversion for Mainland China Retail? That's my two questions. Thank you.
Thank you, Karl. Fanny, do you want to take the share buy-back and talk about China Retail?
Good. Thank you, Karl, for the question. I think our commitment to the share buy-back is evidenced by the consistent implementation of our current HKD 1.5 billion program, which the Board approved back in August 2024.
We have been buying back shares almost daily over the past six months, and now we have kind of completed around 76% up to the 7th of March. The share buy-back program basically will be in place until May this year. This program is managed by an independent broker, which the company does not interfere. We will assess whether we will continue the share buy-back when it gets closer to May, taking into consideration the market condition and also the company's liquidity. I also like to remind one thing is any extension of the share buy-back program will need to comply with the Hong Kong Stock Exchange rules and regulations, including the company cannot process any inside information at the time of announcing share buy-back.
Karl, as far as the Chinese Mainland Retail sales are concerned, I think certainly in the fourth quarter of last year, we saw an improvement across all our centers in the Chinese Mainland, where we saw sort of negative growth basically reaching a point where we've seen flat or even mildly positive sales growth. We've also seen very strong footfall across all our centers, and we're going through a period of trade mix upgrading, so our opening rates are also rising. That sort of flows into the first quarter of 2025, where we've seen, again, mild positive growth in retail sales across all our malls in the Chinese Mainland, particularly in our two malls in Shanghai, in Chengdu, and also in Beijing.
In terms of whether that will flow through in terms of positive rental reversions, I think gradually in time, stronger footfall, obviously better retail sales performance, we expect that it would in base rent and also in turnover rent in our malls in the Chinese Mainland.
Thank you, Fanny and Tim. Next question. Gentlemen here.
Hi, Karl Choi from Bank of America. Two questions as well. Go back to mainland China regarding luxury retailers' commitment to expanding and also opening at some of the new malls. You were getting those questions. I'm sure you will continue to get those questions until you open the new malls. A lot of concerns that given the retail sales pressure these retailers face, they will pull back from their commitments. How secure, how confident that you are regarding the commitment that they have towards the new malls that you are building?
Second question is, one of your peers recently changed the compensation structure of the senior management to be more tied to basically share base. The more major part of the compensation will be tied to the share price performance. Just curious about the management thoughts about making similar changes, and if so or if not, why or why not? Thanks.
Thanks, Karl. As far as the luxury retail brands are concerned, I'm very confident that we have the support from the luxury brands for our new centers and our new developments in the Chinese Mainland. As you know, we've been developing over time a very special retail typology around the Taikoo Li brand, and we've chosen the locations. We're working very closely with those brands on the designs of those malls. That gives me the confidence that they won't pull back from those projects.
I think generally we see where retail brands are choosing to withdraw or close stores, then we're seeing consolidation again following the theme of flight to quality and where we have higher footfall in the stronger retail malls, then we're taking market share. Your second question on remuneration, I think we don't have any plans to change our remuneration structure at the moment. We think we have a reasonable balance between sort of market benchmarking, financial incentives, and also operational incentives, including for health and safety.
Thank you, Tim. Lady at the front.
Thanks. This is Cindy from Citi. Two questions. First is on capital allocation. I am thinking about how will you maintain your balance sheet discipline while incorporating your increasing CapEx needs and the progressive shareholder return?
Will you more actively look into capital recycling, or will you consider to maybe launch and accelerate the sales of some of the residential trading properties? The second question is trying to pick into your crystal ball for Hong Kong Offices. How do you think about the office reversion outlook into 2025? Is there any pickup in leasing inquiry given the, say, stock market's doing a little bit better? When do you see, let's say, Hong Kong Offices starting to potentially bottom out by next year or so? Thank you.
Okay. Fanny, do you want to take the question on capital allocation?
Okay. Thank you. Thank you for the question. I think in terms of our capital allocation, we expect you may understand that our capital commitment for the next few years will be quite big.
One thing we need to highlight is in 2025, we are expecting also quite a big purchase from our residential portfolio. Tim mentioned about the Shanghai project, Taikoo Yuan. The first batch was launched last year in December, and the result was very good. We are expecting to launch the other part of this particular project in this year. Do not underestimate the sales proceeds impact for this particular project. Besides that, we also have a few residential projects in this and next year, including the number 6 Deep Water Bay Road as well as the Headland Residences, which will also be together in these two years. You mentioned about whether we will kind of accelerate some of the residential trading property sale.
I think if you look at our schedule, in 2025 and 2026, we do have quite a lot of residential completion in the pipeline. We do not need to rush to do accelerated sale there.
Your second question was around the outlook for the Hong Kong Office market. As I mentioned, our occupancy rates have remained at pretty healthy levels, 95% in Pacific Place, 94% in One Island East, and One Taikoo Place. I just heard this afternoon that Pacific Place was now at 100% occupancy. We are seeing inspections, and we are seeing some new demand, albeit muted. I think you are right that we will remain under pressure with new supply in 2025. There is quite a high vacancy in the existing stock, and there is new supply coming in West Kowloon in particular, which is going to continue to put pressure on rentals.
I think given that the renewals are cycling on 2022, the quantum of that reversion will slightly narrow in 2025. I think the outlook for us, we can see the supply coming on in 2025. We think in 2026 and 2027, again, following the flight-to-quality trend, we believe we'll start to see stronger demand for triple grade A office. Certainly, we would anticipate that Taikoo Place, following all the investments and the completion of those investments last year, will be a beneficiary of that.
Thank you. In the interest of time, we take the last two questions. First, gentlemen here in the front.
Thank you. Yeah, this is Praveen Choudhary from Morgan Stanley. Okay. Hi, Tim. Hi, Fanny. Two questions for me. One is about the payout ratio.
In the last couple of years, EPS has been coming down while you have been increasing your dividend, which is what you promised. The question is, when does it stop in the sense that when does the payout ratio become so big that you don't continue to grow dividend if the market conditions continue to remain challenging? The second question is about capital recycling, which is a follow-up on Cindy's question. It sounds like you still want to do remaining HKD 30 billion or so of investment because it's only 67% of HKD 100 billion. Where would that money be coming from? Last several sales of assets have been very, very profitable and timely, but I'm wondering what are those other non-core assets other than residential that I understand? Where would those HKD 30 billion be coming from? Thank you so much.
Okay. Thank you, Praveen, for the question.
On the payout ratio, I want to highlight that on a cumulative basis since the listing, our cumulative payout ratio is 50%. Even though this year the payout ratio is, you can say, quite high at 95% based on our underlying profit. The second point is our dividend policy is to, on a long-term basis, pay out approximately maybe 50% of our underlying profit, not the recurring underlying profit. There are two portions of the underlying profit. One is the recurring underlying profit, which we are, through the HKD 100 billion plan, trying to grow the future profitability of these recurring underlying profits. I think with the 67% committed, and Tim mentioned it about, we are quite confident that the future commitment of the new malls will be good. We are seeing quite a good profitability visibility from that.
On the other hand, on capital recycling, we have done a very successful job in this capital recycling, but we do have some capital recycling even in the near term that we are actively pursuing. I think that will help in the near term, even in the near term, it will help the cash flow and also help the profitability.
Thank you, Fanny. Last question, gentlemen.
Yeah, thank you, Tim and Fanny. This is Mark from UBS. I have two questions. I think the first one is a small follow-up on the capital recycling. I see we transferred about HK$4.8 billion investment probably to asset held for sale. I think in the announcement, we are saying it was mainly related to the U.S. Miami Mall. Just want to check if management can hint whether this deal will be executed anytime soon in this year.
I think that's the first question. The second question is regarding on the CapEx side. We see that in 2025 and 2026, CapEx has been revised up a bit. I just want to check what is the rationale behind and what kind of net gearing we are targeting in the long run. Last but not least, I saw that in the announcement, we did not mention we are going to pursue in Shenzhen Futian again. I just want to check, do we hold back thi s project? Thank you.
Thanks, Mark. Maybe I'll start, Fanny, if you want to sort of chip in. On capital recycling, I think in the past, we've said we will look for divestment of non-core assets. We always held the view that in Miami, at the right time, we would consider divestment of our portfolio in Miami.
It's generally been a trading portfolio anyway, so that would be consistent with our track record. As far as capital recycling is concerned, I mean, in addition to non-core, I think with the divestment of the floors in One Island East, we've also demonstrated that on a strategic basis, we've been willing to consider core, what we'd consider core as well. Sort of back to Praveen's earlier question, the HKD 100 billion plan is a long-term plan, a 10-year plan. We've made very good progress in the Chinese Mainland. In Hong Kong, we allocated HKD 30 billion for investment in Hong Kong over that 10-year period. At this stage, we've allocated HKD 10 billion. What we said last time is we will pace the future investments. There's still quite a long period of time before we have to make those decisions.
That kind of really follows on, Mark, to your question around Shenzhen. I mean, we still feel we're still very confident about the long-term prospects for the Greater Bay Area. We're still very keen to find the right investment for Swire Properties in Shenzhen. We just haven't found that opportunity yet. We're happy to take our time until we're confident that we have found something that is really special and that meets our strategic objectives.
Just to supplement what Tim mentioned, the treatment of the HKD 6.4 billion transfer to asset held for sale, they are for Miami and also for a project in Hong Kong in relation to the 6 Deep Water Bay Road. According to the accounting standard, if management believes that within the next years, there is a very high chance for you to sell, you need to classify it like this. That is the reason.
We are actively looking for opportunity. In relation to the gearing target, we always say that we want to maintain the current credit rating. In order to maintain the current credit rating, I think generally, the 20% gearing ratio is what we are trying to maintain. While there were questions previously about our high capital commitment and how we are going to maintain that, I think the answer for that is, number one, in these two years, we have quite a lot of residential trading pipelines which can generate cash flow. As well as the capital recycling program is not stopped here. We are continuing to explore. We still believe that in the next two years, our gearing ratio is going to be between mid-teen to high- teen basis.
We are confident that it will not jeopardize our dividend policy and also it will not jeopardize our future growth momentum there.
Thank you, Tim and Fanny. This concludes our analyst briefing today. Thank you very much for joining us.