Hong Kong’s biggest developer posted a 36 per cent decline in first-half profit, hurt by Covid restrictions and a population outflow.

Sun Hung Kai Properties’ underlying earnings, which exclude property revaluations, fell to HK$9.5 billion (S$1.62 billion) in the six months ended Dec 31, the company said in an exchange filing on Thursday (Feb 23). 

“The residential market in Hong Kong went through a period of consolidation amid weak domestic economic conditions and rising mortgage rates,” the firm said in the filing. 

Another Hong Kong real estate company, New World Development also saw underlying profit fall 14 per cent to HK$3.36 billion for the first half, it said in a separate filing.

Hong Kong’s strict policies during Covid-19 deterred businesses and visitors in the past three years, leading to lacklustre demand for the city’s traditionally sought-after real estate. Office towers and retail space saw high vacancies, while home sales reached a decade low last year.  

That said, major developers’ new-home sales are set to rebound this year with stronger demand from mainland Chinese following the removal of border controls. Sun Hung Kai may achieve its annual sales target in the fiscal year ending in June thanks to its “robust” project pipeline, according to Bloomberg Intelligence.

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The market is already seeing signs of a recovery. Prices for used homes increased by more than 2 per cent since the beginning of the year, after a 16 per cent decline in 2022, data from Centaline show. BLOOMBERG