Developer Hang Lung waits for signs of spring on mainland

PUBLISHED : Friday, 24 January, 2014, 2:19am
UPDATED : Friday, 24 January, 2014, 3:20am

Home prices in Hong Kong could fall this year and the outlook is equally bleak for the mainland property market, Hang Lung Properties chairman Ronnie Chan Chichung said yesterday.

Hong Kong government policies would have a major impact on the market, Chan said, alluding to the series of curbs to check prices as well as an anticipated increase in supply.

On the mainland's real estate market, the developer said winter has set in and there's no indication "when spring will arrive".

The central government's anti-corruption campaign and austerity measures have hit the market, affecting his group's business as about half of its retail centres are targeted at luxury buyers, said Chan.

These policies would, however, help the mainland's broader economic development in the long run, he added.

Chan was speaking to reporters at the company's results briefing yesterday.

Hang Lung Properties reported 14 per cent growth in rental turnover from its mainland property portfolio to HK$3.52 billion, and a 13 per cent increase in operating profit to HK$2.68 billion in the year to December.

The pace of growth was slightly slower compared with the company's interim results, which showed a 15.3 per cent year-on-year growth in rental turnover from mainland properties and a profit of 15.3 per cent.

"I have no idea when spring will arrive," said Chan, referring to sentiment on the mainland market, adding that home prices in Hong Kong could also fall this year.

Hang Lung Properties posted a decline of 14 per cent in net profit to HK$7.21 billion as a result of fewer disposals of investment properties last year. Gains from sales of investment properties amounted to just HK$8 million last year compared with one-off gains of HK$2.15 billion in 2012.

Underlying profit excluding property revaluation gains dropped 18 per cent to HK$5.05 billion year on year. Turnover rose 24 per cent to HK$9.14 billion.

Revaluation gains on investment properties was HK$2.48 billion, compared to HK$2.52 billion the previous year. A final dividend of 58 HK cents a share was proposed, bringing the full-year dividend to 75 HK cents, up from 74 HK cents in 2012.

The company notched up 96 per cent growth in property sales to HK$2.5 billion, boosted mainly by the sale of 267 units in The Long Beach in West Kowloon.

As of December, Hang Lung Properties had cash on hand of HK$34.32 billion. Its total loans amounted to HK$34.98 billion and the net debt gearing was at 0.5 per cent.

Parent Hang Lung Group posted a decline of 13 per cent in net profit to HK$4.46 billion because of fewer disposals of investment properties. Turnover rose 22 per cent to HK$9.73 billion.

Shares of Hang Lung Properties traded 5.13 per cent down to HK$23.10 yesterday, their lowest level since the beginning of this year. Hang Lung Group shares closed down 0.88 per cent to HK$39.40.