Hong Kong's retail sector to rebound with coronavirus vaccine, says New World Development
The worst is over for Hong Kong's retail sector, with sales likely to surge by double digits in the second half of the year, according to New World Development, which has a much more bullish view about the market than its fellow developers.
The imminent roll-out of Covid-19 vaccines and a HK$5,000 (US$644.58) electronic consumption voucher for residents revealed in the budget on Wednesday will help boost local consumption, said Adrian Cheng, executive vice-chairman and chief executive of New World, at a briefing on Friday evening.
"I believe the worst is behind us. I am very optimistic that Hong Kong's economy will recover gradually as more and more Hong Kong residents are vaccinated," Cheng said. "I believe that the local retail market will continue to improve and overall sales, for the second half, will grow by a double-digit percentage this year."
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Compared with the first half of 2020 when the coronavirus outbreak began, New World saw a rebound in the second half, with underlying profit up by 40 per cent, he said.
The company's property sales in Hong Kong surged to HK$26.3 billion (US$3.4 billion) as of December 31, from HK$3 billion (US$387 million) in the same period last year, defying a sharp increase in the unemployment rate, according to interim results filed to the Hong Kong stock exchange on Friday.
Pavilia Farm in Tai Wai, its bestselling project, received the most subscriptions in Hong Kong since 1997. More than 2,100 units were sold, fetching nearly HK$23.8 billion.
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New World's underlying profit, which excludes changes in the valuation of properties, fell 5.4 per cent from a year ago to HK$3.72 billion.
Net profit dipped 0.4 per cent to HK$1.01 billion. Revenue rose 9.6 per cent to HK$35.58 billion, and New World proposed the interim dividend remain unchanged at 56 HK cents.
The developer experienced "strong" growth in its commercial property brand, K11 Art Mall and K11 Musea, recording a 56 per cent increase in sales thanks to the rising popularity of its K11 Musea mall in Tsim Sha Tsui.
Since January 2021, K11 in Hong Kong and mainland China has continued to deliver a "strong" performance with cumulative sales surging 81 per cent from the same period last year.
Fellow developers are not so bullish. Hysan Development said in a stock exchange filing on Thursday that the outlook for 2021 is "far from clear", with a great deal resting on bringing Covid-19 under control globally.
Sun Hung Kai Properties said that despite "rising optimism" in Hong Kong, the operating environment for industries such as tourism remains tough, while tight border controls with the mainland present a major obstacle for near-term economic recovery.
Hong Kong's retail sales have been on a losing streak for almost two years, dropping by up to 44 per cent.
The Hong Kong Retail Management Association in late January forecast that the total retail sales value for the first half of 2021 would be similar to that in the same period of 2020, fluctuating within single digits between positive and negative territory.
This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2021 South China Morning Post Publishers Ltd. All rights reserved.
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