Hongkong Land sees recovery in office market with more demand
'There has been an uptick in inquiries in the first half of this year, particularly in the second quarter. So I think that's a positive sign,' chief financial officer Craig Beattie said, referring to leasing interest in the company's office space. 'The market spot rents are stabilised.'
The developer still anticipates negative rental reversions, leases signed at lower rates, but it expects the size of the reversion to narrow over time, Beattie added.
Hong Kong's office market has been going through a challenging time in the past few years as demand shrinks amid an increase in supply. Office rents are at the lowest in more than 15 years, data from Colliers International show.
Even a large landlord such as Hongkong Land is under pressure in the weak market. Average office rents in its portfolio decreased to HK$95 (S$15.57) per square foot at the end of June, compared with HK$103 the previous year, according to its interim results announced on Tuesday (Jul 29).
Its underlying profit, excluding mainland Chinese non-cash provisions, rose 11 per cent in the six months ended in June from a year earlier.
A NEWSLETTER FOR YOU
Tuesday, 12 pm Property Insights
Get an exclusive analysis of real estate and property news in Singapore and beyond.
Sign Up
Sign Up
The real estate firm's recent shift in strategy to focus on commercial property and share buybacks have boosted investor confidence. Hongkong Land's shares have gained more than 43 per cent since the beginning of the year, making it one of the best performers among its peers. In comparison, the Hang Seng Properties Index is up about 26 per cent this year.
In its biggest pivot in years, Hongkong Land announced a strategy last October to forgo residential development. The firm will eventually set up real estate investment trusts to establish recurrent income with management fees.
The firm set a target to generate US$4 billion in recycled capital by disposing of non-core assets by 2027. It has attained 33 per cent of this target, including selling part of an office tower in Hong Kong for US$810 million in April, with proceeds going to enhance its properties, debt payments and share buybacks. The company also reached 67 per cent of its US$200 million share buyback programme by December.
Hongkong Land, a subsidiary of conglomerate Jardine Matheson Holdings, owns office buildings and shopping malls in Hong Kong, Singapore and mainland China. It is Central's biggest landlord with multiple walkway-connected towers housing the likes of JPMorgan Chase in the heart of the financial district. BLOOMBERG
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Straits Times
an hour ago
- Straits Times
China can buy Nvidia H20 chips again. But it's not all good news
Sign up now: Get ST's newsletters delivered to your inbox The Cyberspace Administration of China on July 31 flagged concerns about possible 'backdoor' security risks associated with the H20 chips, which American chipmaker Nvidia has denied. – Two weeks after Nvidia's chief executive Jensen Huang mounted a charm offensive to court the Chinese market, the American chip giant found itself once again the centre of attention in Beijing – and not in a good way. 'Nvidia, how can I trust you?' So read the headline of a commentary published by the People's Daily, the communist party's mouthpiece, a day after Chinese regulators summoned on July 31 the company's representatives over what they deemed 'serious security issues' related to its chips. The processor in question, known as the H20, was until recently the most advanced chip that Nvidia could sell to China under US restrictions. Washington effectively banned their exports in April amid an escalating trade war, but said in July that it would allow sales to resume. Some US officials touted the easing of export controls as a negotiating chip in ongoing trade talks with Beijing. But this apparent concession, analysts say, is not necessarily all good news for China. 'The reversal of the H20 ban offers short-term relief for China's artificial intelligence (AI) industry,' said Mr Charlie Dai, a vice president and principal analyst at advisory firm Forrester Research. 'On the other hand, it could slow domestic chipset adoption and impact the pace of technology self-reliance (amid) ongoing geopolitical frictions.' A taste for Nvidia China has been advocating the use of homegrown chips by its companies as part of a broader push for self-reliance, including in key technologies such as AI. Top stories Swipe. Select. Stay informed. Singapore LTA, Singapore bus operators reviewing Malaysia's request to start services from JB at 4am Singapore Despite bag checks and warnings, young partygoers continue to vape in clubs in Singapore Singapore President Tharman meets migrant workers who saved driver of car that fell into sinkhole Singapore Now flying solo, Acres CEO Kalaivanan Balakrishnan presses ahead with wildlife rescue efforts Opinion The charm – and drawbacks – of living in a time warp in Singapore Business UMS Integration becomes first SGX company with secondary listing in Malaysia Singapore Ong Beng Seng to plead guilty on Aug 4, more than 2 years after trip to Qatar with Iswaran Business Decoupling to save on tax? You may lose right to property if ties go awry Despite this, many Chinese AI firms – in particular private tech giants – are said to still prefer using Nvidia's H20s to train and run their models, even though the chips are not Nvidia's most powerful. After the US announced a lifting of its export ban, news agency Reuters reported that Chinese companies were scrambling to buy the H20s, citing sources. It also said that Nvidia had placed fresh orders for 300,000 chipsets from its contract manufacturer amid strong Chinese demand. 'The general sense is that Chinese customers, especially Bytedance, Baidu, Tencent and Alibaba, still prefer Nvidia's solutions, whether it's H20 or whatever comes next,' said Mr Ray Wang, research director for semiconductors, supply chain and emerging tech at advisory firm The Futurum Group. Nvidia's edge over its Chinese rivals – which 'continue to improve' – is manifold for now, he explained. Its hardware has larger memory bandwidth, making it better for inference tasks, or the application of trained AI models that makes them useful in the real world. The company also has a stronger software platform with which to program the chips, as well as more capable networking technology to harness the combined performance of hundreds and thousands of processors, Mr Wang said. Importantly, he added, Chinese firms' rivalry with Huawei – seen as the biggest domestic rival to Nvidia on the chip front – also fuels their preference for the American chipmaker. Huawei has a sprawling business empire that boasts not just chipsets, but also extends to cloud computing and AI model development. This puts them in direct competition with the other tech giants. Mr Wang said: 'So if you're Alibaba or Tencent, do you want to source your most important computing resources from Huawei?' The push for self-reliance Nvidia's current advantages notwithstanding, analysts say that China will simultaneously double down on growing its domestic chip ecosystem – a goal that could be helped by regulators' recent scrutiny of the American firm. The Cyberspace Administration of China had on July 31 flagged concerns about possible 'backdoor' security risks associated with the H20 chips, which Nvidia has denied . A People's Daily commentary released on social media the next day sketched out possible 'nightmare' scenarios associated with such risks, such as electric cars suddenly losing power on the highway. It asked the company to provide proof of the chips' security to alleviate users' worries. The regulators' move 'will likely cause Chinese tech firms to temporarily curb adoption (of the H20) due to fears of potential vulnerabilities and regulatory uncertainty, despite strong underlying demand,' said Mr Dai of Forrester Research. He added that even as companies' continued reliance on Nvidia's superior AI capabilities may sustain some purchases of its chips, he expected firms to simultaneously also accelerate shifts towards domestic alternatives. Mr Su Lian Jye, chief analyst at technology research firm Omdia, said that Chinese firms in recent years had already been buying more homegrown chipsets or developing their own amid sharpening geopolitical tensions. These include China's three major telcos, banks, cloud service providers, and various other state-linked companies, he said. Tech giants including Baidu and Alibaba are also developing their own chips. In recent weeks, following news that Nvidia would once again be allowed to ship H20s to China, local firms have spoken up about strengthening support for homegrown chipmakers. On July 25, AI start-up StepFun, a model developer, announced an 'ecosystem innovation alliance' with several domestic chip companies including Huawei, Cambricon, Moore Threads and MetaX, news outlet Caixin reported. The same day, StepFun released a large language model that was developed with the properties of domestic chips in mind, the report also said. Separately, co-founder of cyber-security company Qihoo 360 Zhou Hongyi said on July 23 that his company had turned to procuring domestic chips, and that its recent purchases had all been of Huawei products, news outlet Yicai reported. The company, which has also branched into AI, is on the US' entity list, which restricts access to American technology. Mr Zhou acknowledged that there was a 'gap' between Chinese chips and Nvidia's, but stressed the need to use domestic processors anyway, in comments that were videoed and uploaded to social media. 'If you don't use them, the gap will always be there,' he said. 'The more (you) use them, the more they will improve.'
Business Times
2 hours ago
- Business Times
Property stamp duty takings up 9.5% to S$6.4 billion in FY2024 after two years of decline
[SINGAPORE] Property stamp duty revenue collected in the government's financial year ended March 2025 rose 9.5 per cent to S$6.4 billion, increasing after two straight years of falling takings as transaction volume and value rose. The FY2024 total, based on revised unaudited estimates from the Accountant-General's Department, is 12 per cent higher than an earlier projection of S$5.7 billion for the period April 2024 to March 2025. It also comes close to the all-time high of S$6.76 billion collected in FY2021. The government's stamp duty takings include buyer's stamp duty (BSD) collected on all property purchases and leasing transactions, and additional buyer's stamp duty (ABSD) charged on residential property purchases by individuals and entities as well as developers' purchases of land for housing development. Data compiled by property agency Huttons for The Business Times indicate that overall property transactions rose 16.2 per cent to 59,766 units in FY2024, from 51,433 units in the previous year. The total includes private properties, executive condominiums (ECs), resale HDB flats as well as commercial and industrial units. Rental transactions, meanwhile, inched up 1.3 per cent to 166,246, from 164,124 in FY2023. Stamp duty revenue is on the rise after two years of shrinking takings. Transaction volume fell in FY2023 and FY2022 after higher ABSD rates were implemented in two rounds of market cooling measures – first in December 2021, then raised sharply in April 2023. The higher stamp duty takings in FY2024 may have been driven by robust new launch sales, said Wong Xian Yang, research head for Singapore and South-east Asia at Cushman & Wakefield. A NEWSLETTER FOR YOU Tuesday, 12 pm Property Insights Get an exclusive analysis of real estate and property news in Singapore and beyond. Sign Up Sign Up Christine Sun, chief researcher & strategist of the Realion Group, said 8,680 new homes (excluding ECs) were sold in FY2024, a 37.1 per cent increase from the 6,329 sold in FY2023. More resale homes were also sold, with 14,929 units sold between April 2024 and March 2025, a 31 per cent increase from the year ago period. Overall, there were 24,981 private residential units sold in FY2024, a 30.4 per cent increase from 19,153 homes sold in FY2023, Lee Sze Teck, senior director of data analytics at real estate agency Huttons Asia said. 'A shift in market sentiment due to cuts in interest rates boosted sales in Q4 2024 and Q1 2025,' he added. Moreover, home prices continued to rise in 2024, and increasing transaction values would have resulted in higher stamp duties collected, Sun said. Data from the Urban Redevelopment Authority (URA) showed private home prices rose 3.9 per cent for the full year in 2024, after rising 6.8 per cent in 2023 and 8.6 per cent in 2022. Transaction values across the private residential market (including ECs) in 2024 amounted to S$54.7 billion, about 15 per cent higher than the S$47.2 billion recorded in 2023, said Chua Yang Liang, JLL's head of research and consultancy for South-east Asia. While steep hikes in ABSD rates applying to foreigners led to a plunge in foreign buying, more purchases by Singapore citizens and permanent residents 'may have more than offset the decline in stamp duties collected from foreigners', said Huttons' Lee. Only 1 per cent of private homes (including ECs) purchased in FY2024 were bought by foreigners, down from 1.8 per cent in FY2023, Huttons data showed. PRs accounted for 13.8 per cent of the purchases were by permanent residents, a smaller share from the 15.2 per cent in the year before. 'The poor sales in the Central Business District and prime properties indicate that repeated increases in ABSD have led to structural shifts in the residential market, primarily the moderation in foreigner demand, and investment demand for properties that rely on rental yields,' said Tricia Song, CBRE's head of research for South-east Asia. However, the higher value of government land sales (GLS) transacted in FY2024 could have contributed to an increase in stamp duty collected for FY2024, she said. Developers pay an upfront non-remissable ABSD component of 5 per cent on land purchases. The value of GLS sites sold in the FY2024 period totalled around S$10.3 billion, 13.3 per cent higher than the S$9.1 billion sold in FY2023, according to CBRE Research. For the current financial year FY2025, the government has estimated that stamp duty collection will fall 7 per cent to S$5.9 billion. Stamp duty collection could be slightly lower this year, as the number of private resale transactions may fall, said Realion's Sun. She estimates that 12,000 to 14,000 resale homes could be sold in 2025, fewer than the 14,053 resale homes (excluding ECs) transacted in 2024. 'This is because fewer condos were completed over the past year, which may have resulted in fewer available units being listed for sale.' Realion anticipates that HDB resale volume may dip slightly as well, from 28,986 units in 2024 to an estimated 27,000 to 28,000 units this year. PropertyGuru's Lee noted that Singapore's economy is expected to grow at a slower pace amid evolving global uncertainties, leading to more cautious buyer sentiment. 'However, the strong take-up observed in recent new launches suggests that many buyers have begun to normalise the uncertainty and recalibrate their expectations accordingly,' added Lee. This year, the Core Central Region (CCR) will also see the largest number of units launched since 2021, said Huttons' Lee. The higher prices of prime location properties 'may pull up the overall quantum of transactions subject to stamp duties'. Property tax revenue rises Meanwhile, the government is estimated to have collected S$6.7 billion in property tax in FY2024, a 12.9 per cent increase from S$5.9 billion in FY2023. The tally is just a shade below the budgeted estimate of S$6.67 billion for the year. Property tax is charged based on the annual value (AV) of the property, which is assessed based on the estimated annual rent if the property was rented out. In January 2024, the property tax rate for owner-occupied homes with AVs in excess of S$30,000 was increased to between 6 per cent and 32 per cent. In 2023, the rates were between 5 per cent and 23 per cent. For non-owner-occupied properties, including investment properties, property tax was raised to between 12 per cent and 36 per cent in 2024 from 11 per cent to 27 per cent in 2023. The rise in property tax revenue could be attributed to the higher rates and rising valuations, said Dr Lee Nai Jia, head of real estate intelligence at PropertyGuru. The AVs of HDB flats have also been increased with effect from January 2024 to reflect a rise in market rents, said Realion's Sun. After surging 29.7 per cent in 2022 and rising another 8.7 per cent in 2023, private residential rents fell by 1.9 per cent in the 2024. There were 89,355 private residential units rented in FY2024, a 6.3 per cent increase from the 84,037 units rented in FY2023, Cushman's Wong said. In the HDB market, the number of flats rented out dipped 5 per cent to 36,937 from 38,879 in the year before. Some 27,499 commercial units were leased, a slight decrease from 28,579 units before. There were 12,455 industrial units rented in FY2024, down 1.4 per cent from 12,629 in FY2023. For the current financial year (from April 2025 to March 2026), property tax collection is likely to remain stable or see a moderate increase, supported by a relatively resilient rental market that appears to have reached equilibrium, said PropertyGuru's Lee. Realion's Sun projects market rents in 2025 to rise modestly by up to 2 per cent for both the HDB and private home markets. The Ministry of Finance has set a budgeted estimate of S$6.9 billion for property tax revenue for FY2025, which is 3 per cent higher than FY2024's revised estimates. In total, the government is expected to collect S$104.7 billion in tax revenue for FY2024, 11 per cent higher than the S$94.3 billion collected in FY2023. Total tax revenue is estimated to reach S$110 billion in the current fiscal year.
Business Times
3 hours ago
- Business Times
Buffett's Berkshire hit with US$3.8 billion Kraft Heinz charge
WARREN Buffett's Berkshire Hathaway took a US$3.8 billion impairment on its Kraft Heinz stake, the latest hit to a bet that's weighed on the billionaire investor's company in recent years. On Saturday (Aug 2), Berkshire marked down the carrying value of its Kraft Heinz investment to US$8.4 billion, down from more than US$17 billion at the end of 2017. It's a rare disappointment for Buffett, 94, who was an instrumental force in the merger of both Kraft and Heinz about a decade ago. While the billionaire is still in the black on his bet, the stock of the packaged foods giant has fallen 62 per cent since then. During the same period, the S&P 500 has risen 202 per cent. Berkshire's Kraft Heinz stake is now marked at its fair value as of the end of June. The writedown was 'overdue', said Kyle Sanders, an analyst at Edward Jones. 'You could argue they should have done it a couple of years ago.' Kraft Heinz is now contemplating a spinoff of part of its business as it grapples with headwinds including inflation weighing on consumers' spending and people seeking healthier alternatives to its products. Last month, the company posted a decline in sales that wasn't as bad as analysts had predicted, in part thanks to higher prices. In recent months, Berkshire has signalled that it's taking a slight step back with its ties to Kraft Heinz. In May, Kraft Heinz announced that Berkshire gave up seats on the packaged foods company's board. And because Buffett's company is now limited to what Kraft Heinz discloses publicly, Berkshire said it would start reporting its share of Kraft Heinz's earnings on a one-quarter lag. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up The writedown, disclosed Saturday in a regulatory filing, was driven in part by the sustained decline in fair value. But the company also said it considered its relinquishing of those board seats and Kraft Heinz's push to evaluate strategic transactions when determining how much of a charge to take. 'Given these factors, as well as prevailing economic and other uncertainties, we concluded that the unrealised loss, represented by the difference between the carrying value of our investment and its fair value, was other-than-temporary,' Berkshire said in the filing. While Buffett's conglomerate said it owns 27.4 per cent of Kraft Heinz stock at the end of June, the writedown could ease the path to a reduction of that holding in the future, according to Edward Jones's Sanders. 'I think they're giving themselves more flexibility to potentially exit their position in the future,' he said. 'This is one of Warren's largest missteps in the past couple of decades. It might just be time to move on from it.' Cash hoard Buffett's cash pile ended up dropping 1 per cent in the three months through June, to US$344 billion, the first time in three years that the war chest has shrunk. Those funds had previously kept soaring to all-time highs as he struggled to find opportunities to invest. Buffett ended up taking a cautious approach to the stock market in the second quarter. He was a net seller of other companies' shares during the period, offloading about US$3 billion of equities. He even steered clear of Berkshire's own stock, forgoing any buybacks. He's been on the sidelines for repurchases for roughly a year now, despite the stock falling 12 per cent after Buffett announced in May that he would step down as chief executive officer at the end of the year. Buffett's perceived cautious stance towards the market, including his own stock, may weigh on Berkshire's share performance compared with the market, according to Sanders. 'The things that they need to do to get the stock working, they're just not willing to pull the trigger on yet,' he said. Operating profit Berkshire had a weaker second quarter at its operating businesses. Profit dropped 3.8 per cent to US$11.16 billion, driven by a decline in underwriting earnings at its insurers. Its auto insurer, Geico, posted pretax underwriting earnings that rose 2 per cent to US$1.8 billion in the second quarter. The unit's underwriting expenses surged 40 per cent in the period, as the company spent more to increase its policy count. 'They were behind their peers, they lost market share and it took a couple of years to turn the ship,' Sanders said. 'That comeback is finally on solid footing.' Berkshire's utility business, which runs Pacificorp, MidAmerican and NV Energy, posted a 7 per cent increase in operating earnings. The company said it is currently evaluating the impact of President Donald Trump's tax law as it accelerates the phase-out of clean energy production. At its railroad network operator, BNSF, operating earnings rose 19 per cent to about US$1.5 billion, an increase Berkshire attributes to increased productivity and a lower tax rate. The unit, which Berkshire acquired in 2010, has been caught up in dealmaking speculation in recent weeks. Two major competitors, Union Pacific and Norfolk Southern, struck a US$72 billion deal to create the first transcontinental railroad operator. BNSF's strong performance in the second quarter calls into question the necessity for the railroad to do its own deal to remain relevant, according to Cathy Seifert, an analyst at CFRA Research. 'We just came out of a quarter where they've had to write down a deal that didn't work out very well,' she said. 'So there's really a hesitancy to pay up when you've got a potential target that's been bid up in anticipation of you making a deal.' BLOOMBERG
