Hongkong Land

Strategic developments

Hongkong Land completed its strategic review in October 2024 and is now focused on becoming the leader in Asia’s gateway cities focused on ultra-premium integrated commercial properties. As part of this shift, the group has prioritised simplifying the business by ceasing investments in the Build-to-sell segment, and actively focusing on recycling capital out from this business segment into new integrated commercial property opportunities.

The initial phase of the implementation of this new strategy included the launch, in June 2024, of the redevelopment of the group’s Landmark portfolio in Hong Kong, as part of the transformation of Central to enhance its position as a world class destination for luxury retail, lifestyle and business. This project involves a US$1 billion strategic investment, of which US$400 million will be met by the group, and the remaining US$600 million will be invested by luxury retail tenants.

The group is also making significant progress on its flagship Shanghai West Bund Central development.

Business performance

Despite an uncertain macro-economic backdrop, Hongkong Land delivered a resilient performance for the year. Contributions from the group’s Prime Properties Investment segment were lower, although its commercial portfolios across Asia outperformed their respective markets. The contribution from the Build-to-sell segment decreased as a result of the US$314 million non-cash impairments recognised in the China business, but excluding the impairments, earnings from this segment were 29% higher than the prior year.

Underlying profit attributable to shareholders fell by 44% to US$410 million. There was a loss attributable to shareholders of US$1,385 million, after including net non-cash losses of US$1,795 million arising primarily from the revaluation of the group’s Investment Properties portfolio. This compares to a loss attributable to shareholders of US$582 million in 2023, which included net non-cash losses of US$1,316 million from lower property revaluations.

Prime properties investment

Hong Kong

The group’s Central office portfolio in Hong Kong remains the pre-eminent office space in the market. Physical vacancy was 7.3% at year end, broadly unchanged from the end of 2023. On a committed basis, vacancy was 7.1%, significantly lower than the wider Grade A Central market vacancy level of 11.6%, indicating that the group’s offices continue to be in high demand despite subdued broader market fundamentals. The group’s average portfolio office rent in 2024 also fell by less than Grade A Central office rents in general. The outperformance by the group’s Central office portfolio of key benchmarks in the Central Grade A office market aligns with a bifurcation in the market between the most premium space and the rest. Hongkong Land’s new strategy to focus on ultra-premium office spaces means that its portfolio is well positioned to take advantage of supportive market conditions when they occur.

Contributions from the group’s luxury retail portfolio in Hong Kong were lower in 2024 than in 2023, due to planned tenant movements as part of the Tomorrow’s CENTRAL transformation. The ultra-high net worth segment remained resilient, however, with a 1% increase in customers spending more than HK$200,000 per annum, despite a generally weaker luxury retail market in 2024.

Upon completion of the Tomorrow’s CENTRAL transformation over a three-year period, Landmark will house 10 world-class multi-storey Maison destinations, meeting luxury tenants’ demand for additional space to house their enhanced offerings.

The value of the group’s Investment Properties portfolio in Hong Kong at 31 December 2024, based on independent valuations, declined by 5% to US$22.8 billion (excluding the impact of accounting reclassification for areas occupied by the group), primarily as a result of a fall in market rents for Hong Kong office.

Singapore

The group’s Singapore office portfolio delivered another year of strong operational performance. Physical vacancy at the group’s office portfolio was 1.6% at the end of 2024, while on a committed basis vacancy was 1.0%, compared to 0.9% at the end of 2023. Average rent was S$11.1 per sq. ft. in 2024, up from S$10.9 per sq. ft. in the previous year. The valuation of the Investment Properties portfolio in Singapore was stable year on year.

China

Performances were mixed during the year, with a lower contribution from One Central Macau due to the impact of planned mall renovations, as well as a weaker operating environment. Contributions from the group’s luxury retail mall in Beijing, WF CENTRAL, however, increased compared to the prior year, driven by tenant mix optimisation, despite a challenging market landscape.

The first component of West Bund, the group’s large-scale development in Shanghai, was successfully completed in 2024, with 80 luxury residential units sold at prices amongst the highest in the Shanghai primary residential market. Completion of the other components is expected to occur in phases from 2025 to 2027.

Build-to-sell

Although earnings from the group’s Build-to-sell business were lower in 2024 than in 2023, this was as a result of US$314 million net non-cash impairments in the China Build-to-sell segment recognised during the year. Excluding the impairments, contributions from the build-to-sell segment increased by 29% compared to 2023.

As the group has moderated its pace of building a land bank for this segment since 2022, and will no longer deploy capital into new opportunities, contributions from this segment are expected to decline over the next few years as capital is recycled.

China

As at 31 December 2024, the group’s net investment in the Build-to-sell segment on the Chinese mainland was US$5.8 billion, compared to US$6.6 billion at the end of 2023.

The group’s share of total contracted sales in 2024 was US$1,343 million, lower than the US$1,530 million achieved in the prior year. At 31 December 2024, the group’s attributable interest in sold but not yet recognised contracted sales amounted to US$1,112 million, compared to US$2,031 million at the end of 2023.

Singapore

Hongkong Land’s premium residential developments in Singapore continued to draw strong interest in the market. The group’s attributable interest in contracted sales was US$460 million in 2024, compared to US$587 million in the prior year, primarily due to limited inventory available for sale. The attributable interest in revenue recognised in 2024 was US$351 million, compared to US$443 million in the prior year. At 31 December 2024, the attributable interest in sold but not yet recognised contracted sales amounted to US$829 million, compared to US$736 million at the end of 2023.