Physical vacancy of Hongkong Land (SGX:H78)’s Central office portfolio improved to 5.1% in Sep-22 from Jun-22’s 5.4%. On a committed basis, vacancy was 4.8%. (Jun-22: 5.1%). These compared favourably with the overall Central market which saw its office vacancy edging up to 8.3% in Sep-22 from 7.9% in Jun-22, according to Jones Lang LaSalle. Heightened global economic uncertainty has inevitably led to softened leasing demand in 2H22.
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Nonetheless, negative rental reversion continues to work its way through its Central office portfolio in 2H22 given high expiring rents of HK$136psf. About 24% of floor area is scheduled for roll over in 2023. With expiring rents remain high at HK$111psf, office reversionary growth should continue to stay negative.
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Hong Kong is gradually re-opening its border with Mainland China, which should pave way for full-fledged retail sector recovery. This could brighten the earnings outlook of the company’s retail portfolio.
Hongkong Land's Singapore portfolio continued to enjoy favourable rental growth upon renewals and new lettings. Supported by healthy leasing sentiment, physical vacancy improved to 4% in Sep-22 from Jun-22’s 4.7%. The committed vacancy was low at 0.7%.
Construction delays to drag Hongkong Land's near-term earnings.
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Above is an excerpt from a report by DBS Group Research. Clients of DBS may access the full PDF report @ https://www.dbs.com/insightsdirect/.
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