Hong Kong's Wharf Corporation registers profit in the initial half of the year, as the luxury property sector in the region provides a counterbalance to the challenges faced in the mainland market.
Hong Kong developer Wharf (Holdings) has reported a profit of HK$535 million (US$68.2 million) for the first half of the year, marking a significant turnaround from a loss of HK$2.64 billion in the same period last year. This positive development can be largely attributed to the rebound in Hong Kong’s luxury housing market.
The luxury property sector's strong performance was evident in a record-breaking transaction at the 50%-owned Mount Nicholson development on The Peak. A penthouse was sold for HK$609 million, reaching a remarkable HK$144,000 per square foot. This high-value transaction contributed to a 56% increase in revenue from Hong Kong projects, totaling HK$475 million in the first half of the year.
The company's underlying net profit, excluding revaluations, also saw a 3% increase to HK$2.04 billion. Lower borrowing costs and reduced interest expenses played a crucial role in this improvement. The company's revenue, however, declined by 19% to HK$5.67 billion due to weaker demand in mainland China.
Stephen Ng, chairman and managing director of The Wharf Group, expressed his optimism about the growing interest in Hong Kong's luxury housing sector. However, he also noted that potential buyers remain relatively prudent about the amount they are prepared to pay.
In a positive move for shareholders, the company will pay an interim dividend of HK$0.20 per share, the same as last year's dividend. Despite the financial recovery, the company did not provide any forecasts or outlook for the second half of the year in the filing.
The financial results were filed to the Hong Kong stock exchange on Tuesday. The recovery in Hong Kong's luxury housing market has been instrumental in offsetting challenges elsewhere and reinforcing Wharf’s financial position.
The financial results of Wharf (Holdings) demonstrate the significant impact of Hong Kong's luxury housing market rebound on their business, as a remarkable HK$609 million transaction at Mount Nicholson development and a 56% increase in revenue from Hong Kong projects contributed to a substantial profit. Lower borrowing costs and reduced interest expenses also played a crucial role in the financial improvement.
