Hang Lung Properties chairman Ronnie Chan Chi-chung labelled recent prices at government land auction “irrational fever” and cautioned that his own company is having trouble replenishing its land bank in the city amid aggressive bidding from deep-pocketed mainland rivals. “In the 1980’s the market was dominated by British firms. Then Hong Kong firms took a growing share in the industry in 1990’s, and now its turning to mainland firms. It is a natural development,” said Ronnie Chan Chi-chung, chairman of Hang Lung Properties on Thursday. His comment come a day after Chinese conglomerate HNA won its third residential site in Kai Tak development area for HK$5.53 billion, or HK$13,000 per square foot. The price tag is about 27 per cent higher than the price struck in December by casino tycoon Lui Che-woo’s K Wah International, which paid HK$5.87 billion, or HK$10,220 per sq ft. HNA’s aggressive land acquisition spree has lifted land prices in Kai Tak area by 160 per cent to HK$13,600 per sq ft in three months. Chan labelled land acquisitions at government auction as “recent irrational fever” adding that prices “will return to normal in the long run”. In Hong Kong, Hang Lung has only 80 units at Long Beach in Tai Kok Tsui and 16 houses at Blue Pool Road, Happy Valley left unsold. Chan, however, said the 16 remaining houses at Blue Pool Road could fetch a higher value when compared to apartments at Long Beach. He said the firm would take action should any unexpected outcome occurred similar to the financial crisis which hit Asia in 1997. Chan said the firm’s commercial projects in Shengyang, Wuhan, Wuxi and Kunming have set aside land for residential projects. On Thursday, the firm reported underlying profit, excluding revaluation gains in investment properties, rose 45 per cent to HK$6.34 billion, or HK$1.38 per share, the company said in a statement to the Hong Kong exchange. Analysts polled by Reuters were expecting net income of HK$4.7 billion to HK$6.9 billion. Despite strong property sales in Hong Kong, earnings for its Shenyang Forum 66 and Wuxi Center 66 malls were severely hit by sluggish retail market sentiment. “These two malls, housing a relatively large number of high-end tenants, suffered from non-renewals and early terminations and [we] had to make some downward adjustments to rents,” Chan said in a company statement. “Their aggregated revenue dropped by 18 per cent when compared with last year. Occupancy of the Forum 66 mall retreated by three points to 84 per cent. With more new leases concluded in the second half, occupancy rate of the Center 66 mall improved eight points to 80 per cent at year-end date,” he said. China rental income will probably become its major revenue in coming years Alfred Lau, Bocom International Alfred Lau, an analyst at Bocom International, said Hang Lung has sold most of its Hong Kong residential properties. “China rental income will probably become its major revenue in coming years,” said Lau. For the year ended December 2016, Hang Lung said its revenue contribution from property sales jumped 345 per cent to HK$5.32 billion, while rental revenue remained flat at HK$7.73 billion. Net profit, including a revaluation loss of HK$286 million from property investment, rose 22 per cent to HK$6.19 billion. In 2015, the firm recorded a HK$631 million revaluation gain in property investment. Hang Lung’s shares have risen 12 per cent in the past six months. The company shares rose 2.12 per cent to HK$19.22 after the results announcement. The developer plans to pay a final dividend of 58 HK cents per share, the same as a year ago. Its parent, Hang Lung Group, reported underlying profit soared 40 per cent to HK$3.77 billion last year. It plans to pay a final dividend of 61 HK cents.