Hongkong Land reported Thursday its first half underlying profit increased 12 percent on-year to US$394 million on higher profit from development properties on the timing of sales completions.
Contributions from investment properties were resilient despite negative rental reversions in Hong Kong, the company said in a filing to SGX.
The company reported a net loss attributable to shareholders of US$865 million, narrower than the US$1.83 billion loss in the year-ago period. The loss included a net non-cash loss of US$1.26 billion from revaluation of investment properties due to lower open market rents, Hongkong Land said.
In China, higher sales completions pushed attributable interest in contracted sales to US$1.36 billion in the fist half, up from US$591 million in the year-ago period, the statement said.
The Hong Kong office portfolio performed “relatively well amidst the ongoing market downturn,” the statement said.
Vacancy was at 6.4 percent at end-June, compared with 6.3 percent at end-December, while office rental reversions were negative, putting the average at HK$118 a square foot in the first half, compared with an average of HK$121 in the year-ago period, Hongkong Land said.
“New office leasing activity saw a modest increase in the period as a result of improved sentiment and a narrowing rental gap between Central and other parts of the city,” the statement said.
The retail portfolio in Hong Kong’s Central area saw a modest recovery in the luxury market’s sentiment, with average retail rents at HK$180 a square foot at end-June, up from HK$151 in the year-ago period, the statement said.
However, vacancy was at 0.9 percent at end-June, compared with 0.3 percent at end-December, the statement said.
“Base retail rental reversions were negative in the period and the group continued to provide temporary rent relief on a case-by-case basis,” the company said.
The Singapore office portfolio’s vacancy rate climbed to 7.5 percent at end-June from 2.1 percent at end-December, Hongkong Land said. Average office rents rose to S$10.20 a square foot in the first half, up from S$9.90 in 2020.
Hongkong Land issued a steady outlook.
“While higher second-half underlying profits are expected from the group’s development properties business due to more sales completions on the Chinese mainland, overall conditions are expected to be similar to those of the first-half,” Ben Keswick, chairman, said in the statement.
Hongkong Land declared an interim dividend of 6 U.S. cents a share, unchanged on-year.