Wharf REIC bearish as net dives 81pc to $890m

Staff reporter

Wharf Real Estate Investment Company (1997), the operator of Hong Kong's biggest mall Harbour City, said its net profit for 2024 plunged 81 percent from a year earlier to HK$890 million on the losses from property revaluation amid a weak demand for commercial real estate.

The company will pay a second interim dividend of 60 HK cents per share on April 24, bringing the total distribution for the year to HK$1.24 per share, down from HK$1.28 in 2023.

Chairman and managing director Stephen Ng Tin-hoi remained pessimistic about Hong Kong's commercial property market.

"I am not confident that the market will improve in the first half, nor am I seeing any signs of a rebound," he said.

Ng said confidence would return if office tenants start to expand or overseas firms came to Hong Kong.

Many residents would be happy again if the private home market rebounds, he added.

In terms of hotels, Ng revealed that room rates remained depressed without any sign of improvement.

Wharf REIC's revenue decreased by 3 percent from the previous year to HK$12.9 billion. Investment properties contributed HK$10.8 billion, down 1 percent year-on-year, while hotel revenue declined by 1 percent to HK$1.54 billion.

The underlying profit, excluding the impact of the property revaluation losses, inched up 2 percent to about HK$6.14 billion.

The net revaluation deficit of investment properties was recorded at HK$5.62 billion in 2024, compared to HK$1.17 billion in 2023.

Vacancy at Harbour City and Times Square malls remained modest, but weaker turnover rent amid declining tenant sales affected revenue, the company said in a filing with the stock exchange.

While increased visitor arrivals supported hotel occupancy rates, room rates decreased in line with market, it said.

The company said it offered flexible lease terms to office tenants and accelerated premises improvements, lifting occupancy to 90 percent by year-end.

Total revenue from Harbour City, including hotels, rose by 2 percent to HK$9.1 billion, while operating profit increased by 0.4 percent to HK$7.2 billion, accounting for 70 percent of the group's revenue and 74 percent of its operating profit.

Times Square saw a 6 percent decline in both revenue and operating profit, but the square "maintained its position as a major retail landmark in Causeway Bay."

"Despite challenging conditions, Times Square secured in-house expansions and new commitments from technology, media and financial firms," it said.

TikTok rival Xiaohongshu reportedly leased a 7,000-square-foot office in Times Square last month, where China's e-commerce giant Alibaba (9988) also has an office.

Looking ahead, Wharf REIC said the external environment has grown more complex with escalating trade conflicts and global economic uncertainty.

However, it expects the operation of Hong Kong International Airport's three-runway system and the government's stimulus measures to boost the retail and hospitality sectors.