Swire Properties, the biggest landlord in Island East district, expects office rents to remain stable after it reported a 58.6 per cent growth in adjusted full-year underlying profit on higher rental income and property sales.
Excluding a revaluation gain on investment properties and the impact of the sale of the Festival Walk shopping centre in 2011, core earnings rose to HK$6.93 billion last year from HK$4.37 billion in 2011.
Turnover grew 46.7 per cent to HK$14.05 billion from HK$9.58 billion.
A final dividend of 38 HK cents per share will be paid.
It was the first set of full-year results for Swire Properties after it was spun off from Swire Pacific in January last year.
"The [rental] market for offices will probably be stable this year," said Martin Cubbon, Swire Properties' chief executive.
The company's investment property portfolio totals 14.4 million square feet and includes the retail and office complex Pacific Place in Admiralty and Cityplaza and One Island East in Quarry Bay.
On the mainland, it has 6 million sq ft of completed investment properties, including Sanlitun Village in Beijing and Taikoo Hui in Guangzhou. It also has 500,000 sq ft of investment properties in the United States and other countries.
An additional 4.3 million sq ft are under development or held for future development.
Cubbon remained upbeat about retail rents, saying the company had generated good growth in sales at Pacific Place last month as consumer sentiment rebounded. "The trend for retail is still pretty good," he said.
Gross rental rose 5.4 per cent to HK$9.01 billion, while profits from property trading totalled HK$1.83 billion, largely from the sale of 98 units at the Azura residential development.
Chairman Christopher Pratt expects profit from property trading to be lower but, nevertheless, significant this year with the completion of the Argenta residential development and the expected sale of the remaining units at Azura.
"The effect of substantial increases and other changes in Hong Kong stamp duty on demand for luxury residential properties is uncertain," Pratt said.
Separately, Swire Pacific reported underlying profit plunged 51.7 per cent to HK$8.34 billion last year because of lower profits from its aviation, beverages, and trading and industrial divisions. Income from the aviation division dropped 83 per cent profit to HK$916 million.
The directors declared a final dividend of HK$2.50 per A share and 50 HK cents per B share.
Shares of Swire Properties yesterday closed 3.02 per cent lower at HK$27.30 while Swire Pacific shares fell 1.15 per cent to HK$99.15. The Hang Seng Index rose 0.28 per cent.