Emperor sees stable gains in retail rents
Property investment and development company Emperor International Holdings expects rental income from its retail properties to increase by up to 20 per cent this year, despite slowing growth in retail sales in Hong Kong.
'We believe the retail rental market will have stable growth this year, and we're optimistic about it,' executive director Donald Cheung Ping-keung said. 'It's not possible for rents to keep surging, but we should be able to achieve annual growth of 10 per cent on average in the coming two to three years.'
Saying that about 30 per cent of its retail leases would come up for renewal this year, Cheung said the company should be able to maintain a 10 to 20 per cent increase in retail rental income this year.
He said tourist arrivals were rising and many European and American brands were seeking to set up stores in Hong Kong, but with limited retail space, demand would be strong.
Rents of stores in Russell Street in Causeway Bay might beat New York's Fifth Avenue to become the world's highest per square foot this year, Cheung said, adding that there was only a 5 per cent difference in rents between the two places last year. Monthly retail rentals on Russell Street, where Emperor has 63,400 square feet of retail space, tripled in three years to HK$2,500 per sq ft in terms of saleable area, based on a recent transaction, he said.
His comments came a day after the Hong Kong-listed company reported a 29.4 per cent increase in net profit to nearly HK$4.46 billion for the year to March. Profit of its rental properties before revaluation surged 17.1 per cent year on year to HK$459.73 million.
Revenue from flat sales totalled HK$636.7 million after the company booked about 15 per cent of profit from four residential projects in the last financial year.
The hospitality arm reported revenue growth of 35.7 per cent to more than HK$1.83 billion.
It proposed a final dividend of 5.2 HK cents per share. Together with the interim dividend of 5 HK cents, the dividend per share was 10.2 HK cents.
The company said it would seek to increase its land bank. Apart from getting sites by acquiring flat ownership in old buildings and bidding for projects by the Urban Renewal Authority, it is interested in government sites in Tseung Kwan O and Island South that are suitable for low-rise development.
The company also announced plans to redevelop the Emperor (Happy Valley) Hotel into a luxury residential project, after its new 300-room hotel at 373 Queen's Road East in Wan Chai was completed in 2015.
Also from Emperor Group, Emperor Entertainment Hotel said net profit rose 40 per cent year on year to HK$465.47 million. It proposed a final dividend of 6 HK cents, giving a total dividend of 10.3 HK cents for the year.
The rise in retail rents in prime locations in Hong Kong last year, according to Savills