Longfor Group's commercial property division has achieved another success with its capital expenditure renovation strategy. In mid-June, the year-long Capex renovation at Longfor's Beijing Daxing Tiandi project concluded. The unveiling of a 12-meter-tall "Tree King," a 10-meter cross-floor waterfall, and plant-enveloped outdoor seating areas has transformed the space into a new "urban oasis." Over the past few days, this newly created scene, named "Muguang Island," has become one of the most popular commercial areas in Beijing's Daxing District. Data shows that in the first four days after Muguang Island's opening, the decade-old Beijing Daxing Tiandi mall achieved annual highs in total sales, customer footfall, and vehicle traffic. Average daily footfall exceeded 60,000, a year-on-year increase of nearly 15%, while average daily vehicle traffic grew by over 30%. Sales excluding automotive tenants reached nearly 35 million yuan, surging more than 150% year-on-year. Sales within the Muguang Island area alone surpassed 1.6 million yuan in the first four days, representing a staggering year-on-year increase of over 700%.
The Beijing Daxing Tiandi project is not an isolated case. Over the past two years, Longfor Group has significantly increased its investment in renovating existing properties. To date, several of its flagship projects, including Chongqing Beicheng Tiandi, Suzhou Shishan Tiandi, Hangzhou Binjiang Tiandi, and Beijing Changying Tiandi, have all completed their Capex renovations. The positive results from revitalizing these existing assets have begun to materialize in 2026.
Taking Chongqing Beicheng Tiandi as an example, the project underwent a comprehensive 600-day renovation without closing for business. The overhaul encompassed architecture, landscaping, and interior finishes. Concurrently, new brands were introduced, including international names like Coach and Vivienne Westwood, alongside several brands' first or flagship stores in Chongqing. Following the completion of the entire renovation, Chongqing Beicheng Tiandi reported a year-on-year revenue growth exceeding 50% for the period from January to May this year.
The substantial improvement in same-store sales data for renovated projects has become a key driver for the overall positive performance of Longfor's commercial business. As of the end of May, the overall occupancy rate for Longfor's operational shopping malls stood at a high 97%. For the first five months, total revenue excluding automotive tenants grew by 18%, with same-store sales increasing by 9% year-on-year.
Project Upgrades Fueling Future Growth
"Project upgrades and renovations will subsequently become a new driving force for the group's commercial growth," revealed Longfor Group's management during a recent shareholders' meeting when discussing commercial operations. They disclosed plans to open eight new shopping malls in the second half of this year and will initiate the upgrade and renovation of the group's largest commercial project, Chongqing Times Tiandi.
Strategic Shift Towards Operations and Services
Amidst a shift in the traditional development logic of the industry, Longfor has been proactively scaling back its property development volume in recent years while promoting healthy growth in its operation and service businesses, with commercial properties being a prime representative. In 2025, Longfor Group's combined revenue from operations and services reached a record high of 26.77 billion yuan, accounting for 27.5% of the group's total operating revenue. The core profit after non-controlling interests for the operations and services segment for the full year was 7.92 billion yuan, with an overall gross profit margin exceeding 50% and a net profit margin of approximately 30%.
"Longfor's operations and services business has become the pillar of the company's cash flow and profits," stated Longfor Group's management at the shareholders' meeting. They emphasized that this segment, serving as the company's growth engine, is expected to maintain a steady growth trajectory in the future.
Transformation and Market Recognition
Under a new strategic framework and valuation logic, Longfor Group is further deepening its transformation. According to management forecasts, by 2028 at the latest, the revenue from Longfor's operations and services business is projected to surpass that from its development business, marking the completion of the group's income structure transition.
The market has endorsed Longfor's transformation efforts. Recently, international rating agency Fitch adjusted its rating methodology for Longfor Group, shifting from its previous China Homebuilder Methodology to the Asia-Pacific Real Estate REIT Methodology. Fitch stated that the new methodology reflects Longfor's evolving business model. Over the past few years, Longfor's development business has contracted while its operations and services business has continued to grow. In 2025, the operations and services segment accounted for the majority of the group's total assets and EBITDA, becoming a key driver of the company's credit profile.
Comments