Hongkong Land expects full-year performance to be 'moderately affected'

PROPERTY developer and investment company Hongkong Land's full-year underlying performance is expected to be moderately affected by a reduced contribution from its investment properties portfolio, the mainboard-listed company said in an interim management statement on Thursday.

This is due to the provision of temporary retail rent relief and a delay in the timing of profit recognition in respect of development properties in mainland China caused by pandemic-related construction delays, Hongkong Land said.

The group is also expecting further losses on the revaluation of investment properties in the second half of the year due to adverse market conditions.

In its investment properties, contributions from the office portfolio remained stable in Q3.

Rental reversions in the group's Hong Kong Central office portfolio were negative, reflecting subdued market conditions with few leasing enquiries. In the nine months ended Sept 30, rental reversions were broadly neutral, although vacancy increased to 6.9 per cent, compared with 5 per cent at the end of June.

For its Central retail portfolio, rental reversions were negative, reflecting falling retail rents across the city. Vacancy was 0.7 per cent on both a physical and committed basis as at Sept 30, compared with 0.4 per cent as at June 30.

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Rental reversions in its Singapore office portfolio were positive, reflecting the general increase in rent over the past few years. Vacancy fell to 1.3 per cent at Sept 30, from 1.5 per cent in end-June. On a committed basis, vacancy remained low at 1 per cent.

In Beijing, tenant sales at WF Central in Q3 exceeded that in the same period last year, which means no further rent relief was provided with the improved trading conditions.

In development properties, Hongkong Land's recent launches in mainland China benefited from a rebound in market sentiment.

The group's attributable interest in contracted sales in mainland China was US$639 million in Q3, up from US$566 million in the same period last year.

In Singapore, pre-sales at the 1,404-unit Parc Esta and 638-unit Leedon Green projects have performed well given the market conditions, benefiting from pent-up demand. The group's attributable interest in contracted sales was US$145 million in Q3, comparable to US$148 million the same period last year.

In the rest of South-east Asia however, construction activities have largely been curtailed by the pandemic; and market sentiment remains subdued, it said.

Hongkong Land also said its financial position remains strong, with net debt at US$4.7 billion as at Sept 30, compared with US$5.6 billion in end-June. Committed liquidity was US$4 billion, up from US$2.7 billion in June.

Hongkong Land shares closed at US$3.90 on Thursday, up 1.04 per cent or four US cents.