Hongkong Land's 1HFY2025 underlying profit could spring back from its year-earlier loss — which was largely due to non-cash impairment charges against its mainland China properties — despite falling rental income from its Hong Kong offices.

The landlord might ease its Hong Kong office vacancy risk with only 2% of its Central district leasing portfolio subject to expiry over the rest of this year, according to its interim management statement.

Its Hong Kong retail vacancy rate appears likely to increase beyond March's 4.5% reading, as about 40% of its lettable area will be closed for renovation this year.

The landlord might have booked gains from the sale of nine office floors and some retail space at One Exchange Square to Hong Kong Exchanges for US$810 million in April. Three office floors were transferred in May.

However, the landlord might continue to suffer lower rental income with up to 40% of the Landmark's leasable retail area due to be undergoing renovation. Its gross rental revenue dropped 5% to $888 million in 2024, mainly due to a 5% decline in its Hong Kong office rents to an average of HK$101 a square foot.

Its office-vacancy rate in the city fell to 7.3% as of end-2024 from 9% a quarter earlier.

Hongkong Land targets capital recycling of US$4 billion to US$6 billion by the end of 2027 through winding down its build-to-sell residential business and divestment into REITs and other third-party capital vehicles.