Hong Kong's largest developer, Sun Hung Kai Properties (SHKP), reported a record full-year underlying profit of HK$21.47 billion, but analysts warned that rents and property prices could decline if the global economy deteriorated. For the year to June, the developer's result was 55 per cent higher than the last year's HK$13.88 billion and above market expectations of HK$18.8 billion to HK$20 billion. Taking into account revaluation gains on investment properties, net profit rose 60 per cent to HK$48.09 billion for the year to June. But the outlook is clouded. The Asian Development Bank has lowered its forecast for economic growth in Asia (excluding Japan) this year from 7.8 per cent to 7.5 per cent and also cut its growth estimate for next year to 7.5 per cent from 7.7 per cent. 'We are heading for a tough business environment,' said Lee Wee Liat, regional head of property at Samsung Securities (Asia). 'The market is expecting a downward adjustment in property prices, and demand for office space could be diminished as a result of the massive layoffs in the US and Europe. It will cause a correction in the rental market as well.' As the Hong Kong and central governments moved to curb investment demand and contain the growth of property prices, developers would have to abandon high-pricing strategies when they launched new projects, according to an analyst who asked not to be named. 'It will certainly affect their profit margin,' he said. But SHKP itself remains upbeat about the market. Thomas Kwok Ping-kwong, vice-chairman and managing director of SHKP, said the group would continue to acquire land despite the global financial rout. He was asked whether the majority shareholder, the Kwok family, will repurchase its shares since the stock has dropped 21 per cent this year, compared with a 20 per cent drop in the Hang Seng Property Index. 'Every stock is undervalued now,' Kwok replied, without elaborating. Yesterday, the company's 81-year-old chairwoman, Kwong Siu-hing, wife of the late founder, Kwok Tak-seng, announced she would retire on December 8, and that the board had appointed Thomas Kwok and brother Raymond Kwok Ping-luen as joint chairmen. Their roles as managing directors and executive directors remain unchanged. Kwong's retirement appears to remove uncertainty over the succession plans of the property empire. The family's US$20 billion fortune placed second on Forbes Magazine's list of Hong Kong's richest. The succession issue became important after a Kwok family feud erupted in February 2008 when SHKP said Walter Kwok Ping-sheung - Kwong's eldest son - would take a temporary leave of absence. In May of that year he was demoted, after 18 years in the top job, to non-executive director. and his mother replaced him as chairman after he lost a legal fight to retain his position. To calm shareholder anxiety about a repeat of the 2008 long-running family feud, Thomas said he and Raymond, his younger brother, communicated well with each other. 'We have specific responsibilities and talk whenever we come across divergent views on the company's business strategy,' he said. 'At the same time, major decisions need to seek approval from our board, and we have a committee made up of a group of executive directors to go through every [investment] decision in detail. The committee holds meetings every week to update progress.' Said Raymond, 57: 'Thomas is just one year older than me. I'm confident that we are able to co-operate with each other very well.' Eric Chow, executive director of Sun Hung Kai Real Estate Agency, said the developer's property sales had reached HK$13 billion since July 1, while the sales target for the year to June 2012 was HK$28 billion. Profit from property sales increased 152 per cent to HK$16.64 billion, while rental income grew 14 per cent to HK$9.51 billion for the year to June, compared with a year earlier. A final dividend of HK$2.40 will be proposed, up 30 per cent from HK$1.85 a year earlier.