Wharf firms up balance sheet as Hong Kong home sales cushion profit slump

Hong Kong developer Wharf (Holdings) is increasingly relying on Hong Kong’s luxury-home market to offset weakness in mainland China, while paring investments and building up cash as it navigates an uncertain outlook.

Revenue from Wharf’s Hong Kong development properties nearly tripled to HK$1.35 billion (US$172 million) from HK$475 million in the first half, with operating profit rising more than fivefold to HK$166 million, according to its interim results announced on Tuesday. That helped offset a 54 per cent drop in revenue from mainland development properties, where the company booked a HK$547 million impairment provision.

The contrast highlights how improving buyer sentiment and transaction activity in Hong Kong are providing a rare bright spot for the developer as China’s prolonged property downturn continues to weigh on its remaining mainland projects.

The company recognised the sale of its first house at its ultra-luxury 1 Plantation Road project on the Peak for HK$558 million, or about HK$91,000 per square foot. Its 30 per cent-owned Victoria Voyage project in Kai Tak sold 198 units for HK$3.53 billion during the period.

Wharf said Hong Kong’s residential property market had shown “meaningful gains in both price and transaction volume”, but warned that the recovery faces a new potential headwind as China firms up oversight of outbound capital.

“The Central Government’s tighter outbound direct investment regulations have added uncertainty to the broad residential market, and the implications will need to be monitored,” Wharf said.