Hopewell looks to surge in rents after profit plunge

While net earnings are down 93pc for the first half, developer expects boost from office rentals

PUBLISHED : Tuesday, 28 January, 2014, 1:36am

UPDATED : Tuesday, 28 January, 2014, 3:47am

Thomas Wu is optimistic on the second half. Photo: Dickson Lee

Hopewell Holdings saw its net profit drop 93 per cent to HK$739 million in the six months to December due to fewer gains from property revaluations.

However, the firm said the key driver for the second half will be a surge in rental income from Wan Chai as office tenants look for cheaper districts.

Underlying net profit from its core business, including property development and toll-road operations, increased 3 per cent year on year to HK$606 million. The slump in net profit was distorted by the HK$9.8 billion revaluation gain of Hopewell Centre Phase II and other investment properties.

"The driving force for the second half will be from rental as the new rates in Wan Chai and Kowloon Bay both saw double-digit growth," managing director Thomas Wu Man-san said yesterday in a teleconference.

The company expected the passing rent for office space at Hopewell Centre to rise 14 per cent year on year to HK$36 per square foot, while that at Kowloon International Trade & Exhibition Centre will increase 16 per cent to HK$12.50 per square foot.

The Hopewell II, a 55-storey convention and hotel complex, should be finished in 2018. The company paid HK$4.2 billion upfront for the HK$9 billion project and is confident of financing the remainder through cash and bank borrowings. The company suspended the spin-off of its Hong Kong property unit last June.

Wu said he had been in talks with Hilton Hotel for the management of the 1,024-room hotel in Hopewell II. Hilton left Hong Kong in 1995 when the old Hilton hotel was torn down and redeveloped into Cheung Kong Center.

Hopewell Highway Infrastructure, a subsidiary of Hopewell, saw flat earnings of 311 million yuan in the six months to December. Toll-road revenue from the Guangzhou-Shenzhen Highway rose 12 per cent year on year but was offset by losses in the West Delta Routes.

The Avenue, a redevelopment project jointly held by Hopewell, Sino Land and Urban Renewal Authority, has sold more than 940 units and fetched HK$9.4 billion in sales.