Hongkong Land

• Underlying profit down 5% to US$734 million
• Improved results from Investment Properties
• Lower development profits on the Chinese mainland
• Group financial position remains strong
• Dividend maintained, final dividend at US¢16 per share

Hongkong Land’s underlying performance during the year was impacted by lower profits from Development Properties, which offset improved results from Investment Properties. Challenging market conditions impacted total contributions from Development Properties business on the Chinese mainland. Profits from the group’s Investment Properties increased, mainly due to an improved performance from its luxury retail and Singapore office portfolios, offsetting reduced contributions from the Hong Kong office portfolio.

Underlying profit attributable to shareholders fell by 5% to US$734 million. The loss attributable to shareholders was US$582 million after including net non-cash losses of US$1,317 million arising primarily from the revaluation of the group’s Investment Properties portfolio. This compares to a profit attributable to shareholders of US$203 million in 2022, which included net non-cash losses of US$573 million from lower property revaluations. In both years, the net negative revaluation movements principally arose in Hong Kong, where there was a gradual decrease in valuations of the group’s prime office portfolio, primarily due to a decline in market rents and a mild expansion of capitalisation rates.

Investment Properties

In Hong Kong, the Central office market remained weak, reflecting subdued capital market sentiment, although the group’s Central office portfolio remained resilient and continued to outperform the overall market. At the end of 2023, physical vacancy was 7.4%, while on a committed basis it was 6.8%, compared with 4.7% at the end of 2022. Vacancy was, however, well below the 9.9% vacancy for the Central Grade A office market overall. Average office rents were HK$106 per sq. ft. in 2023, decreasing from HK$111 per sq. ft. in the prior year due to negative rental reversions.

The group’s LANDMARK retail portfolio saw a steady recovery in tenant sales and footfall in 2023, following the relaxation of pandemic restrictions and the reopening of Hong Kong’s borders. Average retail rents increased from HK$177 per sq. ft. in 2022 to HK$203 per sq. ft. in 2023, mainly due to mildly positive rental reversions and the removal of temporary rent relief. Vacancy, on both a physical and committed basis, remained low at 1.5%.

In Singapore, the group’s office portfolio continued to perform well. Average office rents increased to S$10.9 per sq. ft. in 2023, from S$10.6 per sq. ft. in 2022. On a committed basis, vacancy in the group’s office portfolio remained low at 0.9%, compared with 2.2% at the end of 2022.

Contributions from our luxury retail portfolio in Beijing and Macau were higher than the prior year, as footfall and retail sales improved following the lifting of pandemic restrictions.

• Investment Properties – Office
• Investment Properties – Retail
• Development Properties

In Shanghai, work continued to progress well on the West Bund development, the group’s 43%-owned prime 1.1 million sq. m. mixed-use development. The project’s first phase, consisting of a luxury residential tower and serviced apartments, completed construction at the end of 2023, with residential sales to be launched in 2024. The rest of the West Bund development is targeted to be completed in phases from 2024 to 2027.

The combined value of the group’s prime Investment Properties portfolio reduced by 5% in 2023.

Development Properties

As anticipated, the profit contribution from the group’s Development Properties business on the Chinese mainland was lower than the prior year, due to a combination of lower sales, reduced profit margins and the impairment of some residential for sale assets, in particular two residential projects in Wuhan.

The group’s attributable interest in contracted sales in 2023 increased to US$1,530 million, from US$1,300 million in 2022. At 31st December 2023, the group had an attributable interest of US$2,031 million in sold but unrecognised contracted sales, compared with US$2,087 million at the end of 2022.

In Singapore, Development Properties profits recognised were largely in line with the prior year. The group’s attributable interest in contracted sales was US$587 million, compared with US$615 million in the prior year. During the year, the group launched sales for 638-unit Tembusu Grand – in which 59% was sold or reserved as at the end of the year. There was solid sales performance at the 638-unit Leedon Green and 407-unit Piccadilly Grand and Galleria developments, which are both effectively sold out.

The group’s joint venture projects in the rest of South East Asia performed within expectations, producing a combined profit contribution in line with the prior year.