Hongkong Land Q3 Underlying Profit Drops 13% as Central Contribution Dips

Hongkong Land reported a 13 percent year-on-year drop in third-quarter underlying profit on lower contributions from the builder’s Central-based hometown office portfolio.

The declining results for its Central office holdings, a set of 12 interconnected commercial buildings at the heart of Hong Kong’s financial district, come despite lower vacancy in the high-end hub. “Vacancies on a committed basis declined to 6.4 percent at 30 September, compared to 6.9 percent at the end of June, continuing a steadily improving trend from a peak of 7.6 percent at the end of September 2023,” Hongkong Land said in a management update released Thursday. Physical vacancy for the portfolio stood at 7.5 percent.

While the real estate unit of Jardine Matheson said it was achieving higher rents in its Singapore office holdings during the third quarter, Hongkong Land did not provide information on leasing rates in its Central portfolio.

Data from property consultancy Colliers shows that average Grade A office rents across Hong Kong’s Central and Admiralty districts declined 5.3 percent from the end of 2024 to 30 September this year. In its half-year results released in July, Hongkong Land said average office rents in its Central portfolio slid to HK$95 ($12.10) per square foot per month in the January through June period, from HK$103 during the same period last year.

Big Disposals Continue

At the end of October, Hongkong Land completed its second significant capital-recycling deal of 2025 with the sale of Southeast Asia developer MCL Land to Malaysia’s Sunway Group for $579 million. Net proceeds from the divestment amounted to $657 million.

The divestment followed the first key capital-recycling transaction in April, the sale of office floors and retail spaces at One Exchange Square to the Hong Kong Stock Exchange for HK$6.3 billion ($810 million).

The two disposals have helped the London-listed builder reach 50 percent of its target of recycling at least $4 billion in capital by the end of 2027.

“The group’s financial position remains strong,” Hongkong Land said. “The group generated net cash inflows in the third quarter, which combined with proceeds from the sale of MCL Land, saw net debt and gearing at 31 October reduce to $4.4 billion and 15 percent respectively.”

Back in Black

In July, Hongkong Land reported a first-half attributable profit of $221 million, reversing a year-earlier loss of $833 million, as the valuation of the Central office portfolio stabilised for the first time since rents began to decline in 2019.

The group’s underlying profit, which ignores the fair-value change of investment properties, reached $297 million after a $7 million loss in the year-earlier half. Excluding non-cash provisions in the mainland China build-to-sell business — a segment the group no longer invests in — underlying profit totalled $320 million, up 11 percent.

Hongkong Land said Thursday that buyer sentiment in the China residential sector deteriorated in the third quarter as the impact of new stimulus policies proved limited. A thorough review of the carrying value of the group’s China build-to-sell inventory is planned at year-end.

“For the full financial year, the group’s outlook on underlying results remains unchanged, with performance, excluding provisions, expected to be lower than the prior year,” Hongkong Land said in the management update.