Rising office and retail rents helped Hysan Development, the largest landlord in Causeway Bay, post a 27.4 percent increase in its 2007 earnings.

The firm brought in HK$3.95 billion. It's 2007 underlying profits - excluding revaluation gains on investment properties - were HK$1.16 billion, up 14.4 percent year-on-year.

The company will give its stockholders a final dividend payout of HK$0.48 for each share owned.

Office-rental revenue increased by 23.3 percent to HK$567 million, contributing 41.4 percent of the firm's total underlying revenue of HK$1.37 billion. The rental revenue of retail properties grew 17.7 percent to HK$505 million. Rental revenue from residential properties also surged 12.9 percent to HK$262 million.

"We are cautiously optimistic about the year ahead," said Peter Lee, chairman of Hysan.

He noted that the slowdown in the US economy may cast uncertainty on this year, but he believes Hong Kong's economic fundamentals remain sound.

"Our tenants remain positive," Lee said.

Lee expects the overall rentals in the company's portfolio to grow more than 10 percent this year.

Hysan also plans on investing in property markets in Western countries and on the mainland.

The financial market woes led to a correction in asset prices, so "the investment opportunity is increasing", Lee said.

"We can raise our debt to bankroll our investments," he said, adding that Hysan's net debt-to-equity ratio is low - 6.8 percent at the end of 2007, compared with 7.9 percent a year earlier.

Office-space additions in the city should total 342,000 sq m this year and 187,000 sq m next year, according to a Rating and Valuation Department report issued yesterday.

But Lee said he isn't worried about supply increases in the office sector.

"If the economy is as good as what we see now, the office take-up rate will also be good," he said.

He believes that his tenants are unlikely to move from Causeway Bay to other new business-and-shopping districts such as Island East and Kwun Tong.

"Causeway Bay is nicely developed" as a business center, he said.

(HK Edition 03/14/2008 page2)