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Sun Hung Kai Properties Ltd posted a 15 per cent decrease in first-half profit as Hong Kong’s biggest developer warned of a slowdown in the city’s residential housing market.

Underlying earnings, which exclude property revaluations, fell to HK$14.8 billion (US$1.9 billion) in the six months ended December 31, the company said in an exchange filing Thursday.

“2022 is likely to remain challenging with a number of uncertainties,” the developer said in the filing. “Hong Kong’s residential market has been slowing during the past few months as the local stock market stayed at relatively low levels and the number of local Omicron infections increased.”

Property developers in the global financial hub are grappling with some of the world’s harshest border controls to curb the virus, dealing a blow to business and tourism. Vacant office stock in Hong Kong climbed to a record high in December to 9.1 million square feet (845,000 square meters) — equivalent to nearly 158 football fields, according to real-estate services provider CBRE Group Inc.

Revenue from property sales — typically the company’s biggest source of income — sank 31 per cent in the period from the year before. The next months could present further challenges for real estate firms as the city battles against its biggest outbreak of Covid-19.

Social-distancing measures have made it more difficult for buyers to view apartments, hindering home sales. Still, low interest rates and solid demand continued to support the market, particularly for small- and medium-sized units, the builder said.

Gross rental income from properties including offices and malls rose slightly by 2.2 per cent. In future, rental income from shopping malls may come under pressure with reduced foot traffic due to pandemic restrictions.

Source: NewStraitsTimes, BLOOMBERG / February 25, 2022

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