Hong Kong developer Henderson Land’s first-half earnings nearly halved as a subdued office property segment continued to weigh on office rents amid high interest rates, geopolitical tensions and a changing retail landscape, the company’s chairmen said.
Profit fell 47 per cent year on year to HK$3.17 billion (US$407 million), reflecting a fair value loss of HK$2.26 billion after revaluation of the group’s investment properties, Henderson said in a Hong Kong stock exchange filing after trading hours on Wednesday. Fair value loss in the year-earlier period was HK$116 million.
“Interest rates are expected to be adjusted downward in the second half of this year, which will bode well for the overall economy, as well as the property market in Hong Kong,” Peter Lee Ka-kit and Martin Lee Ka-shing, Henderson’s chairmen, said in a the filing.
Initiatives to connect the capital markets of Hong Kong and mainland China, as well as listings by leading mainland firms in the city, “will enhance Hong Kong’s status as an international financial centre over the long term”, they added.
The company joins a club of its peer developers and landlords that have turned in disappointing first-half results.
Swire Properties’ underlying profit fell 8 per cent year on year to HK$3.57 billion in the January to June period. Wharf Holdings swung to a loss of HK$2.63 billion from a profit of HK$696 million a year earlier. And earnings for CK Asset, the property developer of billionaire Li Ka-shing’s family empire, tumbled 16.7 per cent to HK$8.6 billion.
Henderson’s new namesake prime office building in Central, The Henderson, is “about 60 per cent let and has started to bring in rental income”, the company said.
As of June, Henderson had a Hong Kong land bank with a total gross floor area of about 23.5 million sq ft, including 11.1 million sq ft of projects under development.
On the residential side, Henderson said about 4,600 units are expected to be available for sale in Hong Kong in the second half of the year.
The developer proposed a HK$0.50 dividend, the same as it declared in the first half of 2023.
Henderson Investment, the unit that runs several department stores in Hong Kong, said it lost HK$69 million in the first half, nearly four times its HK$18 million loss in the same period in 2023.
Besides an increase in outbound tourism and cross-border consumption by Hong Kong residents, the absence of a consumption voucher this year further hobbled the retail segment, the company said.
“Looking ahead, the business environment of Hong Kong’s retail sector is expected to remain challenging,” said Martin Lee, Henderson Investment’s chairman. “The group is conducting a thorough review of the performance of its stores. This effort aims to streamline the group’s store network and optimise the deployment of its resources in improving business performance and enhancing operational efficiency.”
The group’s retail activities are carried out by Citistore, which has five department stores and two household speciality stores, and Unicorn, which has two department stores with supermarkets and two stand-alone supermarkets. Brand names include Citistore, Citilife, Apita and Uny.
Hong Kong retail sales fell 9.7 per cent in June to HK$29.9 billion compared with a year ago, according to a provisional estimate by the Census and Statistics Department. In the first six months of the year, total retail sales declined 6.6 per cent year on year.
