Hongkong Land beats forecasts

PUBLISHED : Wednesday, 25 February, 2004, 12:00am
UPDATED : Wednesday, 25 February, 2004, 12:00am

A more stable rental market in the second half of last year provided a much needed cushion to Hongkong Land Holdings' full-year result, which bucked analysts' predictions to fall just 9.7 per cent.

The Singapore-listed company yesterday posted a net profit of US$173.7 million for the year to December, excluding property revaluations. Analysts had expected full-year profit to fall to between $155 million and $160 million.

The milder drop came about after the vacancy rate fell to 7 per cent in the second half, compared with the less than 10 per cent vacancy rate reported in the company's interim report and an average vacancy rate of about 11 per cent in Central.

The largest landlord in Central reported a net revaluation deficit of US$824 million after a decline in the value of its investment properties.

'We are beginning to see some demand coming back and a reduction in vacancy ... these all create a condition where landlords can raise rents,' chief executive Nicholas Sallnow-Smith said.

The Jardine Matheson Holdings subsidiary, which triggered speculation that it was pessimistic about the office market by cutting its interim dividend 42.8 per cent to two US cents, proposed a final dividend of four cents, unchanged from last year.

The company had 72 new tenants last year, compared with 40 new tenants in the previous year. A third of the vacant office space left over by UBS, which used to occupy 10 floors in One Exchange Square and relocated to IFC2, is now pre-leased to Prudential, according to Mr Sallnow-Smith.

However, Mr Sallnow-Smith remained cautious about forecasting a further drop in the office vacancy rate, saying there was still plenty of supply.