New mega devt tipped to add more than 30% rental income in 2012

Developer and landlord Hysan Development Company Ltd (Hysan) expects its new mega property development project "Hysan Place" in Causeway Bay to boost the group's overall retail sector revenue by more than 30 percent starting in 2012.

The Hysan Place development at 500 Hennessy Road, which is scheduled to open this Friday, comprises 15 office levels occupying a gross floor area of 240,000 square feet and another 17 retail space levels taking up 450,000 square feet, accounting for one-third of the group's total retail gross floor area.

Hysan Place's retail space is already fully-let. The company said its retail space has been leased out at an average price of HK$150 per square foot per month. As there are 270,000 leasable retail areas, it means that the monthly rental income generated from the Hysan Place's retail space will be HK$40.5 million per month based on China Daily's calculations.

On a half-year period scenario, this means Hysan can receive HK$243 million retail rental every six month. Compared to the group's interim retail sector rental of HK$510 million in 2012, it means that the Hysan's retail rental income can jump by 32.27 percent starting from this year.

"The launch of the Hysan Place can introduce new categories of retailers such as electronic goods and cosmetics. As the group's retail tenant mix becomes more diversified and balanced, it can help the group better cushion the slow-down of the local retail sales," said Lau Siu Chuen, deputy chairman and chief executive officer of Hysan.

"We are bullish on the long-term economic growth of the mainland and Hong Kong economies so we do not think that the short-term economic volatility of these two economies will cast long-term unfavorable effects on the landlord's retail rental business," Lau added.

However, Hysan Place's office space has only been 40 percent leased out as at the end of June. Lau was confident that as the local economy may start to improve next year, its office tenancy business will also improve.

"Causeway Bay is a major popular tourist shopping area, and recently there has not been any mega shopping mall project launch in this area. I think Hysan Place can exert a positive impact on the landlord's rental business amid the short-term slowdown of local retail sales growth," AMTD Securities Business Manager Kenny Tang told China Daily.

Meanwhile, the property investment company on Monday announced that its net profit had slightly dropped by 3.2 percent to HK$5.8 billion for the six months ended June due to smaller fair value gain on investment properties valuation. The company declared an interim dividend of HK$0.17 a share, representing a jump of 13.3 percent compared to a year ago.

The group's recurring underlying profit, the key measurement of the core leasing business performance, was up 12.8 percent to HK$748 million from the HK$663 million in 2011. This reflected the increase in revenue generated from the leasing activities.

oswald@chinadailyhk.com

(HK Edition 08/07/2012 page2)