Hongkong Land reported on Thursday its 2018 net profit fell 56 percent on-year to US$2.46 billion (S$3.32 billion) on a lower net gain of US$1.42 billion from higher valuations of investment properties.
In 2017, the net gain from higher valuations was US$4.67 billion, it said.
The underlying profit, which focuses on ongoing business performance, rose 9 percent on-year in 2018 to a record US$1.04 billion, it said in a filing to SGX after the market close on Thursday.
“The group’s investment properties portfolio benefited from higher overall average rents. In the development properties business, the contribution from mainland China was broadly in line with the prior year, while higher profits were recognized in Singapore,” Hongkong Land said.
The investment properties segment in Hong Kong benefited from high occupancy and limited new supply in the Central office market, it said, noting its Central office vacancy rate was 1.4 percent at end-2018, unchanged on-year.
The Central retail portfolio remained effectively fully occupied with positive rental reversions, it said, adding average retail rents for the year rose to HK$233 (S$40.02 or US$29.68) per square foot, up from HK$224 in 2017.
In Singapore, the office portfolio vacancy rate was 2.5 percent at end-2018, compared with 0.3 percent at end-2017, although it was expected to fall as committed space is taken up this year, Hongkong Land said.
The outlook was stable, Ben Keswick, chairman of the company, said.
“The profit contribution from the group’s Investment Properties is expected to remain stable in 2019, while anticipated higher profits from the group’s development properties in mainland China as a result of more completions will be offset by lower contributions from other markets,” Keswick said in the statement.