Hongkong Land Loss More Than Doubles to $1.4B as Central Portfolio Pain Continues

Hongkong Land said its attributable loss more than doubled to $1.39 billion in 2024, as falling rents and lower valuations continued to dog the developer’s hometown office portfolio based in prime Central district.

The Jardine Matheson-controlled developer’s full-year loss widened from the $582 million shortfall booked in 2023, according to preliminary results released Friday. Revenue rose 8.6 percent to $2 billion on heightened property sales.

Underlying profit, which ignores the fair-value change of investment properties, fell 44 percent to $410 million, stung by $314 million in non-cash provisions recognised in the mainland China build-to-sell segment. Excluding that item, underlying profit dipped 12 percent to $724 million.

“We expect a partial recovery in 2025 underlying profits amidst uncertain market conditions, although at levels well below that of 2023,” said Hongkong Land CEO Michael Smith.

Downtown Doldrums

Profits from Hongkong Land’s prime property investments fell 5 percent last year on lower contributions from the Central office portfolio, a set of 12 interconnected commercial buildings at the heart of the financial district. The decline was partly offset by higher profits generated by the Singapore office portfolio.

The value of the group’s investment property portfolio was down 5 percent as of 31 December, mainly due to lower rents for the Central office portfolio, whose physical vacancy was broadly unchanged at 7.3 percent by year’s end. Vacancy on a committed basis was 7.1 percent, lower than the wider Grade A Central level of 11.6 percent, Hongkong Land said.

Average office rents across the Central portfolio fell 4.7 percent to HK$101 ($13) per square foot per month as Grade A Central office rents overall slid by as much as 13 percent, according to the developer.

The portfolio got a boost last month when global law firm Holman Fenwick Willan took up two floors at Hongkong Land’s Alexandra House on Des Voeux Road Central, leasing 22,000 square feet (2,044 square metres) in total, after almost three decades spent in Admiralty.

“Our new strategy to focus on ultra-premium office spaces indicates our portfolio is well positioned to take advantage of supportive market conditions when they occur,” the group said in its results announcement.

Shanghai Spotlight

London-listed Hongkong Land, which is in the middle of a strategy overhaul to diversify beyond its home city, signalled its priorities last week with the appointment of board member Stuart Grant as executive director and chief executive of the group’s $8 billion Westbund Central commercial project in Shanghai.

A longtime Blackstone executive who spent his early career at Jardines, Grant is tasked with leading all aspects of the 1.1 million square metre (11.8 million square foot) project in Xuhui district as a member of Hongkong Land’s executive management team.

Scheduled to be completed in phases until 2028, Westbund Central comprises 240,000 square metres of retail space, 650,000 square metres of Grade A offices and 160,000 square metres of waterfront luxury residences. The project also features two Mandarin Oriental hotels spanning 55,000 square metres and more than 50,000 square metres of culture and art venues.

“The group remains in a robust financial position with a pipeline of ultra-premium properties under development,” Smith said in the results announcement. “Capital recycling initiatives will be prioritised in line with our new strategy.”