While Hong Kong’s retailers are feeling the pinch of a tourism downturn, mall operator Wharf Holdings has bucked the trend by posting on Wednesday stronger-than-expected interim earnings buoyed by resilient rental income.
Wharf, a 52%-owned subsidiary of Hong Kong-listed developer Wheelock, reported that net profit fell 3.3% to 6.75 billion Hong Kong dollars ($870 million) in the six months ended in June from a year ago. But underlying profit, excluding revaluation gains on property investment, rose 14% to HK$5.97 billion on the year.
Revenue grew 12% to HK$20 billion, driven by a rise of nearly 7% in rental income in its two flagships malls in Hong Kong’s prime tourist districts — Causeway Bay’s Times Square and Tsim Sha Tsui’s Harbour City, the territory’s largest shopping center. This was despite a slowdown in the number of wealthy mainland Chinese shoppers visiting Hong Kong.
“The luxury retail market might have already bottomed out,” Vice-chairman Doreen Lee told reporters on Wednesday, referring to improving sales of luxury goods for its tenants in the past two months. “I am cautiously optimistic about the outlook of the second half.”
Lee’s confidence stems from a boost in foot traffic, which she said has grown 10% in Harbour City during the period, thanks to marketing campaigns to attract a more diverse mix of tourists from Southeast Asia, in addition to mainland tourists. The group has also maintained an average rental increase of 10% and has no plans to cut rent for existing tenants.
(Source: Nikkei Asian Review)