Hong Kong outlook ‘pathetic’, ‘dire’ in near term, mall and hotel operator Wharf REIC says as it reports drop in revenue, profit
- Company reports 3 per cent decline in underlying profit for 2019
- New leases and those up for renewal expected to face a downward pressure throughout this year
Hong Kong shopping centre and hotel operator Wharf Real Estate Investment Company (Wharf REIC) said on Thursday the outlook for the city’s economy was “pathetic” and “dire” in the near term.
“We feel Hong Kong is pathetic in the short term. It could take three months, six months or even nine months [for the Covid-19 outbreak to subside and the city’s economy to bottom out], but we have no idea,” Stephen Ng, the company’s chairman and managing director, said during its annual results briefing. “However, in the long run, we believe Hong Kong is still a lovely place to do business. As long as we can walk through the current [crisis], it will be better.”
The company, which owns the Harbour City and Times Square shopping centres in Hong Kong’s core shopping districts of Tsim Sha Tsui and Causeway Bay, reported a 3 per cent decline in underlying profit to HK$9.8 billion (US$1.3 billion) for 2019. Its attributable profit plunged 78 per cent after an investment property revaluation revealed a deficit of HK$5.7 billion. Wharf REIC’s revenue dropped 3 per cent year on year to HK$16.04 billion.
In lieu of a final dividend, the company plans to pay a second interim dividend of HK$0.93 per share on April 23. Its full-year dividend will amount to HK$2.03 per share.
The outbreak, which follows months of anti-government protests, has added to an already worrying decline in tourists and softened consumption. Hong Kong’s retail sector plunged by 21.4 per cent year on year in January to HK$37.8 billion, after a year-on-year drop of 19.4 per cent in December last year, the Census and Statistics Department said on Monday.
Rents, prices of Hong Kong shops in core shopping districts could sink 80 per cent
Ng said leases up for renewal as well as new leases at the company’s shopping centres are expected to face a downward pressure throughout this year. “No landlord can successfully keep the same rents when the market is so dire,” he said.
