Hysan sees green shoots of recovery in retail sector

Staff reporter

Hysan Development (0014) believes signs of a recovery have emerged in Hong Kong's sluggish retail sector though the office leasing market will continue to face pressure this year, with a narrowed decline in renewal rents.

This prediction came as the biggest landlord in Causeway Bay swung to a net profit of HK$35 million last year from a net loss of HK$872 million, thanks to higher rental income.

Hysan chairman Irene Lee Yun-lien noted the overall downward trend of rate cuts remains unchanged despite a slowdown in pace and frequency, adding the recent improvement in the city's stock market will further boost confidence among Hongkongers.

The company will transform itself in response to the needs of local and overseas consumers, and is most concerned about the needs of the younger generation, she said.

She added the Lee Gardens rejuvenation project began delivering financial contributions last year.

Hysan chief financial officer Andy Choi Yick-lam said the company's office occupancy rate increased by 1 percentage point to 90 percent by the end of last year, despite challenges in the office market.

Regarding malls, adjustments to the tenant mix led to some vacancies and the overall mall occupancy rate declined from 97 percent to 92 percent, he said.

However, renewal rents continued to rise, he added, expecting to attract tenants with stronger sales potential and higher rental affordability.

Hysan executive director and chief operating officer Ricky Lui Kon-wai highlighted the strong potential of the Greater Bay Area market. Following the resumption multiple-entry permits for Shenzhen residents, foot traffic and sales at Hysan's malls saw solid growth last month, Lui said.

Hysan kept its dividend for the latter half of the year at 81 HK cents per share, the same as over the second half of 2023.

Underlying profit, excluding property revaluation gains, increased by 6.8 percent year on year to about HK$1.95 billion.

Retail turnover grew 9.5 percent, supported by expansion of luxury brands' flagship stores and positive rental reversion.

However, office turnover declined by 1.5 percent, despite the narrowing negative rental reversion and stable occupancy at 90 percent.

Hysan's shares once rose nearly 5 percent to HK$12.62 before closing at HK$12.58.