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HONGKONG Land Holdings yesterday reported a net loss of US$109 million for 2008, after taking into account revaluation of its properties, compared with a profit of US$2.84 billion for 2007.
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| Fully let: Hongkong Land says Singapore's office market started to soften in the second half of 2008 |
Loss per share came to 4.79 US cents for 2008, against earnings per share of US$1.2372 for the previous year.
Revenue rose to US$1.02 billion, up from US$933.2 million a year earlier.
Hongkong Land, which holds properties in Hong Kong and Singapore and is part of the Jardine group, said that underlying profit rose 9 per cent to US$375 million.
'Strong demand and high occupancy in Hong Kong's Central district continued to underpin both the office and retail sectors in 2008, enabling the group to report a reasonable increase in underlying profit despite provisions made against residential development properties in Singapore,' it said.
However, it cautioned: 'Although the positive rental reversion cycle continued throughout the year and supply of grade A office space remains limited, it is evident that the market in Hong Kong has now begun to decline.'
The contribution from residential development projects was offset by a writedown in the carrying value of development properties by Singapore-based MCL Land, it said.
Financing charges were slightly lower than for 2007 due mainly to lower interest rates.
The independent valuation of the group's commercial investment properties at the end of 2008, including the group's share of investment properties in joint ventures and associates, came to US$14.5 billion, representing a decrease of 4 per cent from the valuation at end-2007.
This reversed an increase of 11 per cent at the half-year mark.
The group said that rents remained at record levels throughout 2008 in Hong Kong's Central district. While demand for high quality commercial office space continued to be strong across all business sectors, there were signs of weakening towards the end of the year.
The luxury retail market also performed well in Hong Kong for the first three quarters of 2008, but it too started to weaken in the fourth quarter.
The Singapore office market also began to soften in the second half of the year, although the group's wholly owned property One Raffles Link and its joint venture property One Raffles Quay both remain fully let.
The group's joint venture development, Marina Bay Financial Centre, which is on schedule to be completed in two phases in 2010 and 2012, is also in a good position with over 60 per cent of the commercial office space already pre-committed, Hongkong Land said.
In the residential sector, Phase IV of Central Park in Beijing, Phase I of Bamboo Grove in Chongqing and MCL Land's projects, Mera Springs and The Esta, were completed during the year, allowing profits on these projects to be recognised in the 2008 results.
The group said that it did not have any major financing requirement during the year and its financial position remains strong.
Said group chairman Simon Keswick: 'Although trading conditions are difficult, increases in rentals achieved in Hong Kong during 2008 together with the recognition of profits on the completion of residential properties already sold in Singapore and Macau should benefit earnings in 2009.
'The group's balance sheet remains strong and will stand it in good stead in the current uncertain economic climate.'
Hongkong Land has declared a final dividend of seven US cents per share for 2008, providing a total dividend for the year of 13 US cents per share, unchanged from 2007.
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