(Bloomberg) -- Sun Hung Kai Properties Ltd. saw profit drop 9%, extending its decline into a third year as Hong Kong’s real estate slump weighs on the city’s biggest developer.
Underlying earnings, which exclude property revaluations, fell to HK$21.7 billion ($2.8 billion) in the year ended June 30, Sun Hung Kai said in a filing on Thursday. The figure also missed the average estimate of HK$22.8 billion from 12 analysts surveyed by Bloomberg.
Expensive borrowing costs and a glut of apartment supply have hurt sales for Hong Kong’s property developers, prompting them to offer discounts to boost transactions. Home prices fell to the lowest level in eight years in July, putting pressure on the residential development business.
Sun Hung Kai’s dividend for the full year was cut by 24% from the previous year to HK$2.8 per share.
The residential market in Hong Kong has “softened” due to high interest rates, the company said in the statement. Property sales revenue fell 4% in the period.
Nonetheless, the group saw a rise of 3% in rental income from its investment properties. Its retail and serviced apartment portfolio offset the loss in the lackluster office sector. Weak demand has pushed office vacancy rates to an all-time high in Hong Kong, and rents may fall as much as 10% this year, CBRE Group Inc. estimates.
Other developers are grappling with disappointing earning results. Li Ka-shing’s CK Asset Holdings Ltd. saw its first-half net income drop by 17%, while New World Development Co. expects to post its first annual loss in two decades.
(Updates with figures and company comment throughout)
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