Uncertainty lingers over Covid-19 impact on Hongkong Land's full-year financials

HONGKONG Land is hazy on how the Covid-19 pandemic will affect its full-year results, the Jardines-backed property group said in an interim update for its first quarter of 2021 on Wednesday.

Its statement comes despite reported resilience in its investment portfolio for the quarter, and "improving market conditions" for the development business in Singapore and mainland China.

On the development front, the group's attributable interest in contracted sales in Singapore fell to US$89 million in the three months from US$170 million in the year-ago period; the company attributed this to the timing of sales launches.

Meanwhile, attributable interest in contracted sales in mainland China rose to US$410 million in the first quarter, up from US$107 million in the year prior, when the pandemic suspended sales and development activities.

Construction activities in other parts of South-east Asia are still limited by the pandemic, and market sentiment remains subdued, the group added.

Separately, rental reversions were negative in the Hong Kong Central office and retail portfolios, as well as the Singapore office portfolio. Physical vacancies climbed when compared with levels as at end-2020.

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"However, 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 group said of the Hong Kong market, even as Singapore rental reversions are expected to turn positive by end-June as tenants move into committed space.

At the same time, Hongkong Land noted that its WF Central lifestyle retail centre in Beijing "continued to benefit from the strength of luxury retail sentiment on the Chinese mainland", with first-quarter tenant sales posting year-on-year growth.

"The group continues to operate in a challenging environment and uncertainty remains about the duration of Covid-19 and the impact it will have on the group's full-year underlying performance," it said in its statement.

Still, Hongkong Land added that its financial position "remains strong", with net debt US$4.2 billion as at March 31, against US$4.6 billion as at end-2020; committed liquidity was flat at US$4.3 billion against the quarter before.

Hongkong Land, which is listed in London, Bermuda and Singapore, owns and manages prime office and luxury retail assets mainly in Hong Kong, Singapore, Beijing and Jakarta. It also develops residential, commercial and mixed-use projects regionally.

Shares closed on Wednesday at US$4.84, lower by S$0.01 or 0.21 per cent.