Hongkong Land posts lower Q1 underlying profit on weaker development properties contribution
PROPERTY group Hongkong Land on Thursday (May 18) said its underlying profit for the first fiscal quarter ended March was lower than that of the corresponding quarter in 2022. This was due chiefly to a reduced contribution from its development properties business on the back of fewer planned sales completions on the Chinese mainland.
Contributions from the investment properties segment were “marginally” higher year on year, with a stronger showing from the retail segment. However, this was partially offset by lower contributions from the Hong Kong office portfolio, the company said in a brief interim management statement posted to the bourse.
In Singapore, the company said rental reversions in its office portfolio continue to be positive, although reversions are likely to moderate for the rest of the year, as caution rises amid uncertainties in the global technology and banking sectors.
Physical vacancy fell to 4.6 per cent as at end-March from 7.5 per cent as at end-2022. On a committed basis, vacancy dipped further to 1.7 per cent from 2.2 per cent.
Hongkong Land said residential market sentiment and demand in the city-state remained healthy in Q1. The group’s attributable interest in contracted sales in the city was US$171 million in the period, compared to US$45 million in the comparable period in 2022.
“It is too early to assess the impact of the increase in additional buyer’s stamp duty introduced in late April 2023, specifically targeted at tempering demand from foreign investors,” warned the company.
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Over in Hong Kong, the company said sentiment has improved in both the office and retail sectors as a result of the lifting of travel restrictions and a recovering local economy.
Its central office portfolio continued to deliver despite competitive market conditions. Physical vacancy rose to 6.3 per cent as at end-March, from 4.9 per cent at the end of 2022.
On a committed basis, vacancy was 5.8 per cent, while vacancy for the overall Central Grade A office market was 9 per cent.
The company noted that rental reversions continued to be negative in the period. Leasing activity improved in recent months, with a meaningful increase in enquiries in the first quarter, compared to both the last quarter and the same period last year, said Hongkong Land.
Headwinds in global financial markets, however, have dampened incremental office demand from the financial-services sector.
Trading at the Landmark retail portfolio in Hong Kong benefited from an increased number of visitors, which led to a significant rebound in tenant sales compared to the corresponding period last year, when sales were badly hit by the fifth wave of the coronavirus pandemic.
Tenant sales and footfall at the group’s Central series luxury retail malls in Beijing and Macau also recovered strongly, compared to the same period in 2022, with the lifting of anti-pandemic restrictions.
For development properties, Q1 brought a modest recovery in market sentiment for residential properties on the Chinese mainland, on the back of government policy support, Hongkong Land said.
The company’s attributable interest in contracted sales was US$408 million in Q1, versus US$213 million in the year-ago period. This was due to more planned sales launches.
Sales activity continued to recover in April. Overall, planned sales completions for 2023 are expected to be higher than in the prior year, the company added.
Hongkong Land said it continued to invest in its share-buyback programme in Q1. As at end-April, the total amount invested in this programme stood at US$598 million.
Shares of Hongkong Land fell 0.5 per cent or US$0.02 to US$4.38 on Thursday before the announcement of the results.
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