However, including an 18 per cent drop in property revaluation gains to US$1.95 billion, the landlord posted an 8 per cent fall in net profit to US$1.9 billion.

Rental income from commercial property increased 24 per cent to US$346 million. Underscoring the strong demand for downtown commercial space, its Central office portfolio rents were 28 per cent higher for the year.

Its office vacancy rate in the district remained at 4.5 per cent at the end of last year, the same as a year earlier, although largely because its newly completed York House was 70 per cent unleased.

Rents in the tower, which boosted Hongkong Land's Central office space 2.8 per cent, were being offered at more than HK$100 a square foot.

'York House is almost the only component available,' said Nicholas Sallnow-Smith, the chief executive of Hongkong Land. 'Demand is strong across all of the range of tenants that we have in our portfolio.'

Mr Sallnow-Smith, who is leaving the company at the end of this month to become the chairman of the Link Reit, expects Central office rents to continue to rise this year.

Profit contributed by residential business last year more than doubled to US$43 million compared with a year earlier, mainly due to the company's Singapore subsidiary, MCL Land.

Revenue from residential sales this year will come from phase three of Central Park in Beijing and three MCL Lands projects.

The developer is also going to launch this year phase one of Bamboo Grove, its joint-venture residential project in Chongqing, but sales will not be booked until its completion after this year.

Hongkong Land declared a final dividend of 10 US cents per share, up from eight US cents in 2005, even though earnings per share were 85.31 US cents, down 8 per cent from a year earlier.

Meanwhile, Hongkong Land's sister company Mandarin Oriental International reported that its underlying profit dropped 6 per cent to US$116.4 million due to the nine-month closure of its Mandarin Oriental hotel for a facelift.

Overall, the hotelier reported a 4 per cent rise in net profit to US$80 million last year, including a US$35 million one-off gain from the sale of the Mark hotel in New York.

Sales rose 4 per cent to US$850.3 million.

The 502-room flagship hotel in Central came back strongly when it reopened in September, charging 50 per cent more at an average of about US$400 per room/night, beating an average 20 per cent to 25 per cent rise in Hong Kong's luxury hotel segment last year, group chief executive Edouard Ettedgui said yesterday.

The temporary closure brought about a US$40 million loss largely from costs related to the retaining of the majority of the hotel's 700 staff members and forgone operating profit.

'The hotel will very much be back to the black and provide significant contribution in the year ahead,' Mr Ettedgui said. 'So far this year started very well in our markets especially Hong Kong.'

The 113-room Landmark Mandarin Oriental in Central had an 81 per cent occupancy rate in its first full year of operations, charging an average rate of US$413 per room/night.

The group's star performer was the Mandarin hotel in New York which raised its average room rate 34 per cent to US$824 per room/night on the back of a 20 percentage point higher occupancy rate of 75 per cent.

The final dividend was doubled to three US cents per share from 1.5 US cents. There was no interim dividend in the past two years.