Hong Kong Causeway Bay's largest commercial landlord Hysan Development (0014) reported a 7.4 percent increase in underlying profit to HK$1.11 billion for the first half of 2026, with the office market showing early signs of recovery despite ongoing negative rental reversions.
The group maintained its first interim dividend at 27 HK cents per share, according to the company’s statement released on Thursday.
Its revenue for the period fell slightly by 0.1 percent year-on-year to HK$1.73 billion and net profit dropped 2.7 percent year-over-year to HK$73 million.
Office revenue rose 0.5 percent to HK$754 million. The developer noted that Hong Kong office portfolio remained under pressure, with negative rental reversions as the market continued to absorb oversupply, while the ramp-up of Lee Gardens Shanghai supported improvement in office revenue.
It also pointed out that Hong Kong’s office market entered an early recovery stage during the period, benefiting from increased leasing momentum that occurred in an expanding financial sector, a revived initial public offering pipeline, and renewed demand from mainland corporates.
The average rental reversion rate on renewals, rent reviews and new lettings for Hysan’s Lee Gardens portfolio remained negative. Nevertheless, occupancy stood at 93 percent as at the end of June.
Meanwhile, retail revenue increased 1.4 percent to HK$874 million. The rejuvenated portfolio continued to drive rental improvement, while tenant sales recorded high-teens growth in the first half.
Retail occupancy in Hong Kong rose by 1 percentage point to 96 percent. Overall rental reversion rate on renewals, rent reviews and new lettings remained positive during the first half.
Residential revenue dropped 15.3 percent to HK$100 million, following the sale of residential units in two blocks at Bamboo Grove.
Lee Irene Yun-lien, chairman of Hysan Development, highlighted that Lee Gardens rejuvenation journey underwent a large-scale harvest phase during the period. The Lee Garden Eight is expected to be completed in the fourth quarter of 2026, which will expand Lee Gardens' leasable portfolio by approximately 30 percent.
Looking ahead, Lee noted that the market is expected to remain dynamic in the second half, with global uncertainty, regional competition, changing consumer behaviour and office market pressures will continue to require vigilance and strong management.
