Declining rental income pulled Hysan Development's first-half net profit down 4 per cent to HK$294.17 million from HK$306.42 million a year earlier.
Gross rental income from properties shrank 10.3 per cent to HK$619 million, compared with HK$690 million a year before.
The first-half rental contraction was partly due to the higher vacancy rate in its largest residential property, Bamboo Grove in Wan Chai, which underwent a year-long refurbishment.
Excluding Bamboo Grove, Hysan said the rental fall year on year was 3.6 per cent.
Chairman and managing director Peter Lee Ting-chang said rental income from its commercial portfolio slid only 3.9 per cent year on year, better than the overall market.
He said the group had achieved a relatively satisfactory result. Its office portfolio occupancy rate was down from 98 per cent in March to 95 per cent now while the retail portfolio was 96 per cent occupied.
Mr Lee expected the economic outlook to remain challenging in the second half.