Real Estate "Core Swap" Marathon: Who Will Cross the Barrier of the New-Old Transition First?

With each cycle’s transition, the market never returns in the same guise. As the real estate market transforms and upgrades, where will the future’s highlights be? In its 2025 performance report, Longfor Group has provided a direction.

Last year, Longfor Commercial added 13 new malls, bringing the total number of malls to 99 by year-end, and is expected to add another 9 in 2026. Going forward, these 100-plus malls, as Longfor’s flow hubs, will drive the vitality and growth of its operations business.

At present, with Longfor Commercial’s two operational lines—commercial investment and asset management—already growing into the group’s growth engine and key profit contributor. As the operations business becomes one of the group’s core pillars, Longfor’s more-than-20-year “core swap” marathon is drawing ever closer to the finish line.

Operations business: the keystone

Amid the turbulent waves of the real estate market adjustment, Longfor’s “giant ship” has kept a clear course and a steady speed.

In 2025, Longfor Group (00960.HK) recorded operating revenue of RMB 97.31 billion and net profit of RMB 1.02 billion. Among them, the biggest business highlight still comes from operations and services.

Last year, Longfor’s operations and services revenue was RMB 26.77 billion, setting a record high, and the revenue contribution ratio reached 27.5%. In the prior three years, this ratio was 11.7%, 13.8%, and 21.0%, respectively.

In 2025, Longfor Group’s overall gross margin for operations and services exceeded 50%. Core profit was RMB 7.92 billion. The two segments combined had a net profit margin approaching 30%, demonstrating strong profitability.

As a group-based company, besides its property development business, Longfor also has two operational routes—commercial investment and asset management—along with two service routes—property services and smart development/constructed intelligence. Among the five routes, operations has become the company’s business focus.

By the end of 2025, Longfor Commercial operated 99 malls in 25 cities through commercial investment, with occupancy rates stable at a high level of 97%. Last year, Longfor Commercial’s average daily footfall was 3.79 million visits, up 16% year over year, with revenue of RMB 82.4 billion, up 17% year over year; rental income increased 4% year over year to RMB 11.21 billion.

Longfor Asset Management mainly includes six businesses: the long-rent apartment brand “GuanYu” (冠寓), the vibrant lifestyle blocks “HuanSi” (欢肆), serviced apartments “XiaFei GongGuan” (霞菲公馆), industrial offices “Blue Ocean Engine” (蓝海引擎), the mothers-and-children hospital “YouYou Baby” (佑佑宝贝), and healthy aging “CunShan WanShu” (椿山万树), achieving full-scene coverage of “living, working, entertainment, healthcare, and aging.”

By the end of 2025, for GuanYu, apartment projects that had been open for more than six months achieved an occupancy rate of 95.7%; the newly launched vibrant lifestyle block HuanSi has officially debuted in four cities, including Chengdu, Hefei, Hangzhou, and Shanghai.

Longfor’s Tianjie, GuanYu, HuanSi, and other brands have taken off in multiple locations, making operations business the keystone of Longfor Group. In 2025, the operations business composed of commercial investment and asset management generated rental income of RMB 14.19 billion, up 1.6% year over year, providing stable cash flow and profit support for the group.

Longfor Tianjie—why does it keep getting more and more popular?

In 2003, Longfor Commercial’s first project—Beicheng Tianjie—opened in Guanyinqiao, Chongqing’s CBD. At the time, this may have been merely an attempt by Longfor during the industry upcycle to diversify and allocate assets.

Later, Tianjie projects rolled out one after another, quickly leading commercial development in major high-tier cities. Having tasted success, Longfor gradually made commercial development a primary direction of long-term investment, setting aside 10% of sales receipts each year to hold as owned properties.

Today, as the real estate industry adjusts, the market’s focus has shifted from short-term real estate development and property sales to operations and services that can generate income and profits over the long run. Operations led by Longfor Tianjie has become one of the group’s core business areas.

In 2025, constrained by the real estate market’s adjustment, the pace of new openings for commercial projects in the market slowed. But Longfor Commercial still maintained a steady expansion pace. Last year, it added 13 operation-oriented malls as scheduled. Flagship projects such as Wuhan Binjiang Tianjie and Chongqing Jiang’an Tianjie opened as new commercial landmarks for their regions.

By the end of 2025, Longfor Commercial had cumulatively operated 99 malls, covering 25 cities nationwide; there were over 7,400 partner brands, including more than 400 strategic partners.

At the same time, Longfor upgraded and renovated multiple leading projects, including Chongqing Beicheng Tianjie, Suzhou Shishan Tianjie, and Beijing Changying Tianjie, among others, to enhance long-term competitiveness through updates to hardware facilities, internal space renovations, and refreshed brand lineups.

So, in an era where AI virtual worlds compete for users’ attention and e-commerce and instant retail make shopping convenient enough, as a representative offline consumption scenario, how can Longfor Tianjie keep sustaining its appeal—opening one that’s on fire after another, and staying on fire continuously?

Up to now, the new-generation Longfor Tianjie uses a forest-inspired courtyard/atrium design to create a relaxed feel in commercial spaces, blending everyday life spaces—such as parks and specialty food markets—with shopping centers, transforming commercial complexes from a simple “place to consume” into a “hub for city life.”

The first-store economy is an important approach that has helped Longfor Commercial enhance its appeal in recent years. For every newly opened Longfor Tianjie, the proportion of first stores is a key KPI. Taking Wuhan Binjiang Tianjie, which opened in 2025, as an example: the proportions of city first stores and flagship stores are as high as 40%.

In addition, Longfor Commercial has created original IPs such as the “Tianjie Fair,” the “Tianjie Huanqiang Season,” the “Tianjie Huanle Season,” and the “Xingchun Season,” continuing to interact with consumers. Among them, Tianjie Huanle Season has been held for nine consecutive sessions. The latest edition by the end of 2025 blends a romantic Christmas party, a mega year-end promotion, and surprise New Year’s Eve celebrations, connecting with nearly 100 shopping centers nationwide.

Driven by operational strategies such as scenario refreshes, the first-store economy, and content innovation, Longfor Commercial’s foot traffic and rental income have continued to grow steadily, evolving into a stable source of revenue, profit, and cash flow contributions for the group.

Rewiring the core: getting to know Longfor anew

As Longfor Commercial has moved into the domestic top-tier commercial property management and operations brands, operations business has become the group’s growth and profitability anchor. Over more than 20 years, Longfor has run nearly to the end of a marathon of core-switching.

From being mainly focused on property development in the past, Longfor has developed into a model where three major segments—development, operations, and services—advance in parallel. Under the “One Longfor” ecosystem, routes such as commercial investment and property services and smart development are coordinated deeply to empower space, create value for customers, and bring consumers a better commercial experience—forming a unique competitive advantage.

No matter how volatile the market is in the short term, Longfor remains steadfast in its investment. In 2026, Longfor Commercial will add and open nine new projects, with 5 parts heavy and 4 parts light—located in core and first-/second-tier cities such as Beijing, Hangzhou, Chengdu, and Changsha, respectively.

The earlier goal proposed by Longfor was that by 2028, revenue from operations and services would exceed revenue from property development.

As the “core swap” process deepens, the market’s understanding of Longfor Group has also been upgraded. In October 2025, Moody’s, in its rating report on Longfor Group, adjusted its rating methodology from residential construction and property development to REITs and other commercial real estate.

In fact, many real estate companies have long recognized the value of operations and services, but among those that can consistently keep their course and pace, continue investing, and still get results, there are very few.

In 2025, Longfor added multiple land reserves, mainly in high-tier markets such as Shenzhen, Shanghai, Suzhou, Chengdu, Chongqing, and Guiyang. After years of rapid inventory turnover, the company’s land reserve dropped to 22.35 million square meters, with an average cost of RMB 4,132 per square meter.

After successfully passing the peak of debt repayment in 2025, Longfor Group’s total comprehensive borrowing amounted to RMB 152.81 billion, down RMB 23.51 billion from the end of the previous year; on-hand cash was RMB 29.20 billion; owners’ equity attributable to the company was RMB 162.81 billion, with a net debt-to-equity ratio of 52.2%. The average financing cost fell to an annual interest rate of 3.51%, and the average contractual borrowing tenor was extended to 12.12 years.

As real estate inventories are turned over quickly and the group’s debt pressure continues to decrease, the impact of the real estate business on Longfor Group is becoming increasingly smaller. The standout performance of the operations business will become more and more evident; and the value of operations within the Longfor system will be increasingly prominent.

Getting to know Longfor anew does take time. But it is foreseeable that in this large-scale transformation of the real estate market, Longfor will definitely be one of the companies that can successfully navigate through the cycle.

Looking ahead, Longfor will continue to deepen the coordinated effect across its three segments: development, operations, and services. Based on the stable cash flow and customer touchpoints created by the operations business, it will feed back into improving the product strength and enabling precise investment in the development business. At the same time, by strengthening customer trust through the services business, it will jointly build a sustainable development ecosystem for the future.