HONGKONG Land Holdings said it plans to open 10 retail developments in the next five years in seven cities across China, bringing the total number of commercial projects in the country to 17.

 

The cities will be Chongqing, Chengdu, Wuhan, Shanghai, Nanjing, Hangzhou and Suzhou, it said in a statement on Thursday (Jun 8), adding the new developments will add 280,000 square meters of retail floor space to its China portfolio.

 

Hongkong Land also said it will complete the US$8 billion West Bund Financial Hub development in Shanghai in three phases through 2027, and start selling the high-end waterfront apartments later this year.

 

The West Bund Orbit, a landmark public art centre, will also be launched by the end of 2023, it added.

 

Acquired in 2020 with a joint-venture partner, the West Bund Financial Hub is built on a 23.1-hectare mixed-use site located in Xuhui district, where the local government plans to create a new international financial centre.

 

The development is the firm&rsquo s largest ever single project investment and twice the size of its Central Portfolio in Hong Kong. REUTERS

 

PROPERTY group Hongkong Land : H78 -0.45% 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 was &ldquo marginally&rdquo 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&rsquo 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.

 

&ldquo It is too early to assess the impact of the increase in additional buyer&rsquo s stamp duty introduced in late April 2023, specifically targeted at tempering demand from foreign investors,&rdquo warned the company. 

 

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&rsquo 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&rsquo 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. 

 

Hongkong Land H78 0.00% has reported a lower underlying profit on a y-o-y basis for the 1QFY2023 ended March 31. While no figures were reported, the group said that the marginal increase in contribution from its investment properties were more than offset by the reduced contribution from its development properties business.

 

The lower contribution from the development properties business was attributed to the fewer planned sales completions on the Chinese mainland.

 

In Hong Kong, the group&rsquo s Central office portfolio reported physical vacancy of 6.3% as at March 31, compared to the 4.9% as at Dec 31, 2022. On a committed basis, vacancy was 5.8%.

 

In comparison, vacancy for the overall Central Grade A office market was 9.0%.

 

Rental reversions continued to be negative in the period.

 

Leasing activity, however, was said to have improved in the recent months with a &ldquo meaningful&rdquo increase in enquiries in the 1QFY2023 compared to the 4QFY2022 and 1QFY2022. Headwinds in global financial markets, however, have dampened incremental office demand from the financial services sector.

 

The group&rsquo s Landmark retail portfolio saw a &ldquo significant rebound&rdquo in tenant sales on a y-o-y basis. Sales in the 1QFY2022 were deeply impacted by the fifth wave of the Covid-19 pandemic. According to the group, the strong recovery also resulted in tenant sales being only marginally lower than its pre-Covid-19 levels. As at March 31, physical and committed vacancy for the portfolio remained low at 0.5%.

 

In the 1QFY2023, tenant sales and footfall at the group&rsquo s Central series luxury retail malls in Beijing and Macau saw a &ldquo strong recovery&rdquo compared to the same quarter in the year before due to the lifting of anti-pandemic restrictions.

 

The group&rsquo s Singapore office portfolio saw positive rental reversions during the period although the group is expecting reversions to moderate during the remainder of the year.

 

In development properties, the group reported attributable interest in contracted sales of US$408 million ($548.8 million) in the 1QFY2023, 91.5% higher y-o-y. This was mainly due to more planned sales launches with sales activity continuing to recover in April. Planned sales completions in FY2023 are expected to be higher y-o-y. Overall, the group saw a &ldquo modest recovery&rdquo in market sentiment for residential properties on the Chinese mainland underpinned by government support during the quarter.

 

As at March 31, the group&rsquo s net debt fell to US$5.2 billion, down from US$5.8 billion as at Dec 31, 2022. As at the same period, 54% of the group&rsquo s debt interest are on fixed rates. As at April 30, the total amount invested in its buyback programme since it was first announced was US$598 million.

 

In March, the group upped its stake in the Nanjing Yue City Project by 15% to 48%. In Singapore, residential market sentiment and demand remained healthy. The group commenced sales for the 638-unit Tembusu Grand in April 53% of the units were sold on its launch weekend. The group&rsquo s attributable interest in contracted sales in the city was US$171 million in the period, compared to US$45 million in the equivalent period in 2022.

 

On Singapore&rsquo s latest set of cooling measures in April, the group notes that it is &ldquo too early&rdquo to assess any impact.

 

PROPERTY group Hongkong Land on Thursday (Mar 2) reported underlying earnings of US$766.1 million for 2022, down 20 per cent from earnings of US$966 million in the prior year. 

 

Net profit came in at US$203 million for the year, after including net non-cash losses of US$573.4 million due chiefly to lower valuations of the group&rsquo s investment properties. In 2021, Hongkong Land booked a net loss of US$349 million, which included a US$1.3 billion reduction in property valuations mainly due to lower market rents for the Hong Kong central portfolio. 

 

The board of directors has recommended a final dividend of US$0.16 per share, unchanged from 2021. 

 

Hongkong Land&rsquo s revenue for 2022 was down 5.9 per cent to US$2.2 billion from US$2.4 billion in 2021.

 

Hongkong Land said its profitability was significantly lower in 2022, due to a lower contribution from its development properties business in the second half of the year, after a record performance in 2021.

 

The contribution from its investment properties segment, however, only had a &ldquo modest&rdquo financial impact in the retail portfolio from the pandemic measures introduced across China last year. 

 

The impact of lower average office rents in Hong Kong was partially offset by a reduction in operating costs, the company said.

 

The combined value of the group&rsquo s investment properties portfolio fell 2 per cent in 2022, due largely to a modest increase in capitalisation rates in the Hong Kong portfolio. There was no change in the capitalisation rates for the Singapore, Beijing and Shanghai investment properties. 

 

For investment properties, the group said office leasing demand remained subdued in Hong Kong. Its central office portfolio, however, outperformed the broader market due to its prime central business district location and premium offering, said the company. 

 

Retail market sentiment in Hong Kong was severely affected by the fifth wave of the pandemic in the first half of 2022. However, retail trading benefited in the second half of the year, as social distancing and travel restrictions were progressively relaxed.

 

In Singapore, contributions from the group&rsquo s office portfolio increased due to positive rental reversions underpinned by a healthy level of occupier demand, with average office rents rising to S$10.60 per square foot in 2022 from S$10.30 per square foot in 2021. 

 

In Beijing and Macau, pandemic measures negatively impacted trading at the group&rsquo s two luxury retail malls, with tenant sales and footfall in 2022 both lower than the prior year. 

 

For development properties, profit contributions from the Chinese mainland fell in 2022 compared to 2021, as a result of a significantly lower profit contribution in the second half of the year due to fewer planned sales completions and the impact of pandemic-related restrictions. 

 

In Singapore, recognised profits in 2022 were also lower than 2021 &ndash where the group had benefited from the construction progress of the wholly-owned Parc Esta project which was handed over to buyers in 2022. 

 

Hongkong Land&rsquo s attributable interest in contracted sales was US$615 million in 2022 compared to US$328 million in the prior year, driven by the healthy pre-sales performance of two new residential projects launched during the year.

 

The 407-unit Piccadilly Grand and Galleria and 639-unit Copen Grand projects are 85 per cent and 100 per cent pre-sold or reserved respectively, Hongkong Land said. 

 

Looking ahead, the company said it continues to be disciplined in evaluating and selecting development opportunities in the Chinese mainland, with a focus on Tier 1 and Tier 2 cities. 

 

&ldquo Stable contributions are expected to continue from the group&rsquo s investment properties business, although rental reversions for the Hong Kong office portfolio are expected to remain negative. The extent of improvement in performance from the development properties business will depend on policy support measures implemented on the Chinese mainland,&rdquo said the company.