Sales-driven growth: Sun Hung Kai Properties' leasing business, with half-year revenue of HKD 52.7 billion, begins to show signs of a ripple effect

Opinion Web In January this year, data released by the Hong Kong Government’s Rating and Valuation Department showed that the private residential property prices are expected to rise by 3.3% in 2025. In December, property prices increased by 0.2% month-on-month, marking the seventh consecutive month of growth, following a 1.1% increase after November’s adjustment. The annual property price increase in 2025 is the first since 2021.

This market performance was further confirmed by the Hong Kong SAR Government over a month later.

On February 25, the Financial Secretary of Hong Kong, Paul Chan, delivered the 2026/2027 fiscal year budget. He mentioned that residential property prices and transaction volumes have both risen, with active trading since March 2025, and annual transactions reaching nearly 63,000, a four-year high. Property prices increased by 3.3% for the year, ending a three-year decline; rents also rose by 4.3%. Non-residential property transactions rebounded, with narrower declines in rent and prices.

Against this positive backdrop, Sun Hung Kai Properties, which contributes about 90% of the region’s income (this period at 88.12%), once again delivered impressive results.

Over Half of Revenue from Property Development

According to Sun Hung Kai Properties’ interim results for 2025/2026, the company recorded total revenue of HKD 52.705 billion, a roughly 31.98% increase from HKD 39.933 billion in the same period last year; operating profit was HKD 13.398 billion, up about 10.75% from HKD 12.098 billion. Net profit attributable to shareholders was HKD 12.213 billion, up 16.73% from HKD 10.463 billion last year.

In terms of revenue contribution, property development remains the main source, accounting for HKD 29.857 billion or 56.65% of total revenue. Of this, HKD 26.474 billion was contributed by the Hong Kong market, representing 88.67% of the development business revenue.

Compared to the same period last year, revenue from property development increased by approximately 82.49%, raising its share of total revenue by 15.75 percentage points from 40.9%.

The company summarized this growth in the announcement: “The demand from end-users and long-term investors has strengthened, with increased transactions in the Hong Kong primary residential market and moderate price recovery. The market sentiment has significantly improved driven by lower mortgage rates and a booming stock market. Meanwhile, continuous inflow of talent and students has kept residential rents rising, further boosting residential sales.”

Specifically, based on equity interest, Sun Hung Kai Properties recorded contracted sales of about HKD 17.4 billion in Hong Kong during this period. The main source was the sale of Phase 2 of the Kai Tak Tsz Tin project. There was also enthusiastic market response to completed projects such as Tuen Mun NOVOLAND Phase 3A, The Imperial in Mid-Levels, Ho Man Tin’s Ocean Palace, Tai Po University Hill, and Tin Shui Wai’s YOHOWEST Phase 1.

The market remained hot into this year, with the launch of Phase 2A and 2B of Sierra Sea in January, setting new records for reservation intentions, with contracted sales exceeding HKD 9 billion.

In Mainland China, based on equity interest, contracted sales reached approximately RMB 1.3 billion, doubling from RMB 660 million last year.

Among projects in the mainland, the Riverside Serviced Apartments Tianxi West in Hangzhou Qianjiang New City performed well, being the main contributor to sales during this period. Other ongoing projects include the wholly owned Junlian near Guangzhou South Station and the joint development Longjing in Foshan, both contributing to sales.

Additionally, the final part of the ITC project in Shanghai Xujiahui, offering about 5.6 million square feet of premium office, retail, and hotel space, is expected to be completed in the second half of this fiscal year. Other projects expected to be completed include Phase 2 of the Guojin Hui Di in Hangzhou, with approximately 350,900 square feet, all units sold out.

In Hong Kong, based on floor area, Sun Hung Kai Properties expects about 1.9 million square feet of properties to be completed in the second half of this fiscal year, including about 600,000 square feet of residential for sale, with the remaining approximately 1.3 million square feet mainly for office space at the High-Speed Rail West Kowloon Station development IGC.

As of December 31, 2025, based on floor area, the land reserves in Hong Kong totaled about 57.3 million square feet, of which approximately 38.2 million square feet are diversified completed properties, accounting for 66.67%, mostly used for leasing and long-term investment, providing substantial recurring income.

The remaining approximately 13.2 million square feet are developable residential properties for sale, meeting the company’s medium-term development needs.

Despite abundant reserves, Sun Hung Kai Properties stated it will continue to supplement land reserves in Hong Kong at appropriate times and through various channels to promote future growth.

In November last year, the company acquired the first phase of the Tuen Mun Area 16 project. The site, located in Tuen Mun South, is planned for a residential project with a total floor area of about 600,100 square feet, offering approximately 1,280 units.

The surrounding community is mature, with excellent transportation and amenities, just fifteen minutes by car from Hong Kong International Airport. The MTR Tuen Mun South extension is expected to be completed by 2030, further enhancing connectivity across the city.

In the mainland, the land reserve totals 64.6 million square feet, with about 42.9 million square feet under development. Over 50% of these developments will be completed as saleable residential and office properties.

The remaining 21.7 million square feet are completed properties, mostly retained for leasing and long-term investment, including several landmark projects in Shanghai’s key commercial hubs. The group plans to continue focusing on existing projects in major mainland cities and providing high-quality green properties to meet evolving customer needs.

Property Investment Business Shows Slight Fluctuations

Unlike the growth trend in property development, Sun Hung Kai Properties’ property investment business in both Hong Kong and mainland China experienced slight declines in rental income.

In Hong Kong, the overall occupancy rate of the investment portfolio remains high, providing stable recurring income. However, including contributions from joint ventures and associates, total rental income was HKD 8.797 billion, a slight decrease from HKD 8.813 billion last year. Net rental income decreased by 1% to HKD 6.265 billion.

According to a report by First Pacific Davies on Hong Kong office leasing, Grade A office leasing in Hong Kong showed a clear selective recovery in 2025, with strong absorption but significant polarization in regional and property quality.

Overall vacancy rates rose to a record high of 15.5% in December 2025, but segmented data showed that core Central Grade A offices maintained steady occupancy, contrasting sharply with the high vacancy and oversupply in East Kowloon.

In Central, vacancy rates fell by 1.9 percentage points to about 11.3%, reinforcing its status as a safe haven; in East Kowloon, vacancy rose to approximately 24.5%, indicating structural oversupply and shifting tenant preferences.

Against this background, combined with demand from financial sector upgrades and internal expansion, Sun Hung Kai Properties’ International Finance Centre (IFC) in Central saw occupancy rise to 98%, and the Global Trade Center (ICC) in West Kowloon maintained a high occupancy of 91%. Office portfolio income remained stable at HKD 2.834 billion (2024: HKD 2.847 billion), supported by high occupancy rates.

The increase in occupancy rates, along with slight rent adjustments, suggests that the company adopted more flexible pricing strategies during the period, helping to sustain strong leasing performance.

Retail property income also declined slightly, recording HKD 4.535 billion (2024: HKD 4.593 billion), a 1% decrease mainly due to rent reductions.

However, several projects have adopted different market strategies to attract visitors.

For example, in Sha Tin, Hong Kong, New Town Plaza successfully launched Dinosaur Park and Chill Park, and in November last year, the outdoor sky garden NTP Sky Garden, covering about 40,000 square feet, opened. The garden features seating, photo spots, and a fountain show, enriching offline visitor experiences.

In East Kowloon, the Scramble Hill shopping mall, with about 500,000 square feet, began phased openings in the second half of 2025. It aims to attract local residents and office workers with spacious leisure areas and outdoor dining, creating synergy with nearby APM Mall and the City of Dreams office complex.

Additionally, the Tianxi TianMall in Kai Tak, covering about 220,000 square feet, will open in phases starting from the end of 2025. The first tenants, including restaurants and shops, have already opened on floors connected to the MTR Kai Tak Station, serving daily needs of residents and visitors.

These new projects are expected to generate additional revenue for Sun Hung Kai Properties. With diversified formats and targeted marketing, they are likely to significantly boost foot traffic and rental yields, further strengthening the company’s market leadership.

The mainland investment property portfolio includes rental income from joint ventures of HKD 3.098 billion (RMB 2.825 billion). Net rental income increased by 1% to HKD 2.4 billion. Retail property income rose about 5% to HKD 2.1 billion (2024: HKD 2.007 billion), mainly due to increased turnover rents.

Overall, the mainland property investment business performed slightly better than Hong Kong.

It is noted that Sun Hung Kai Properties’ retail portfolio in mainland China mainly consists of shopping malls, covering nearly 9 million square feet, which is the primary source of rental income.

Since the second half of 2025, high-end consumption has shown signs of recovery. The company has launched various initiatives in key projects such as the Shanghai IFC Mall, Nanjing Golden Center, Beijing APM, and Guangzhou Tianhe and IGC malls, aligning with market trends and catering to consumer demand for quality and experiential retail. These efforts include promotional activities and tenant sales.

Thanks to these measures, major malls in first-tier cities have achieved high occupancy rates, and tenant sales have rebounded.

However, the increase in retail property income only offset the decline in office rental income. Office rents decreased by 9% to HKD 814 million (2024: HKD 895 million), mainly due to rent reductions on renewal.

Sun Hung Kai Properties stated in its results announcement that the mainland office leasing market faces challenges, with rents and occupancy rates still under pressure.

Latest data shows that the ITC Tower in Xujiahui, Shanghai, has an occupancy rate exceeding 80%, with room for further improvement.

The company also owns other landmark office buildings in Shanghai, including the Shanghai IFC in Pudong and the Shanghai World Trade Center in Puxi. Facing fierce competition, the group emphasizes “retaining tenants as the top priority.”

Regarding ongoing projects, the Shanghai ITC Phase 3 is progressing smoothly and nearing completion. Its final components include the 370-meter-tall Tower B, the flagship ITC Maison mall, and the Andaz Hotel at Xujiahui.

As the tallest building in Puxi, Tower B will provide about 2.4 million square feet of premium office space in the Xujiahui CBD, leased to several multinational corporations.

The ITC Maison mall, covering 2.6 million square feet and seamlessly connected to the metro station, is scheduled to open in phases in the first half of 2026, featuring trendy fashion, lifestyle stores, popular restaurants, and takeaway options. With broader visa-free arrangements and simplified tax refund policies, the new mall is expected to attract more visitors.

The Shanghai Xujiahui Center Andaz Hotel, part of the ITC Phase 3 development, will have over 260 rooms and is scheduled to open in March 2026.

This hotel caters to market demand for quality accommodation and enhances the overall amenities of the ITC Phase 3, becoming a one-stop landmark for commerce, shopping, dining, leisure, and entertainment.

Meanwhile, other integrated development projects in key mainland cities are progressing as planned.

The Hangzhou International Financial Center is developing in phases. After the delivery of the Hui Xi office building of about 378,000 square feet in July 2025, Sun Hung Kai Properties is constructing a vibrant shopping mall in Hui Dong, with about 700,000 square feet, scheduled to open in phases from mid-2027, serving residents of the adjacent Guojin Hui Di residential project. The nearby Central Park is set to open in 2026, providing green space for the community.

The Guangzhou Global Trade Center and Guangzhou South Station are seamlessly connected, with the first phase of commercial development expected to be completed in the second half of 2026. The Tianhe·Guangzhou South Mall, with about 215,000 square feet, will host restaurants and leisure brands. Building 1 of the Guangzhou Global Trade Center, with about 291,000 square feet, has some floors pre-leased to international hotel brands.

Property Investment Business Slightly Fluctuates

Unlike the growth trend in property development, Sun Hung Kai Properties’ property investment income in Hong Kong and mainland China experienced slight declines.

In Hong Kong, the overall occupancy rate of the investment portfolio remains high, providing stable recurring income. However, including contributions from joint ventures and associates, total rental income was HKD 8.797 billion, slightly down from HKD 8.813 billion last year. Net rental income decreased by 1% to HKD 6.265 billion.

According to a report by First Pacific Davies, Hong Kong’s Grade A office leasing market in 2025 showed a clear selective recovery, with strong absorption but notable polarization in regional and property quality.

The overall vacancy rate rose to a record 15.5% in December 2025, but segmented data showed that core Central Grade A offices maintained steady occupancy, contrasting sharply with the high vacancy and oversupply in East Kowloon.

In Central, vacancy rates fell by 1.9 percentage points to about 11.3%, reinforcing its status as a safe haven; in East Kowloon, vacancy rose to approximately 24.5%, indicating structural oversupply and shifting tenant preferences.

Amid this, combined with demand from financial sector upgrades and internal expansion, Sun Hung Kai Properties’ IFC in Central saw occupancy rise to 98%, and ICC in West Kowloon maintained a high occupancy of 91%. Office portfolio income remained stable at HKD 2.834 billion (2024: HKD 2.847 billion), supported by high occupancy.

The slight increase in occupancy rates, along with modest rent adjustments, suggests that the company adopted more flexible pricing strategies during the period, helping to maintain strong leasing results.

Retail property income also declined slightly, recording HKD 4.535 billion (2024: HKD 4.593 billion), a 1% decrease mainly due to rent reductions.

However, several projects have adopted different strategies to attract customers.

For example, in Sha Tin, Hong Kong, New Town Plaza successfully launched Dinosaur Park and Chill Park, and in November last year, the outdoor sky garden NTP Sky Garden, covering about 40,000 square feet, opened. The garden features seating, photo spots, and a fountain show, enriching offline visitor experiences.

In East Kowloon, the Scramble Hill shopping mall, with about 500,000 square feet, began phased openings in the second half of 2025. It aims to attract local residents and office workers with spacious leisure areas and outdoor dining, creating synergy with nearby APM Mall and the City of Dreams office complex.

Additionally, the Tianxi TianMall in Kai Tak, covering about 220,000 square feet, will open in phases starting from the end of 2025. The first tenants, including restaurants and shops, have already opened on floors connected to the MTR Kai Tak Station, serving daily needs of residents and visitors.

These new projects are expected to generate additional revenue for Sun Hung Kai Properties. With diversified formats and targeted marketing, they are likely to significantly boost foot traffic and rental yields, further strengthening the company’s market position.

The mainland investment property portfolio includes rental income from joint ventures of HKD 3.098 billion (RMB 2.825 billion). Net rental income increased by 1% to HKD 2.4 billion. Retail property income increased about 5% to HKD 2.1 billion (2024: HKD 2.007 billion), mainly due to higher turnover rents.

Overall, the mainland property investment business performed slightly better than Hong Kong.

It is noted that Sun Hung Kai Properties’ retail portfolio in mainland China mainly consists of shopping malls, covering nearly 9 million square feet, which is the main source of rental income.

Since the second half of 2025, high-end consumption has shown signs of recovery. The company has launched various initiatives in key projects such as the Shanghai IFC Mall, Nanjing Golden Center, Beijing APM, and Guangzhou Tianhe and IGC malls, aligning with market trends and catering to consumer demand for quality and experiential retail. These include promotional activities and tenant sales.

Thanks to these efforts, major malls in first-tier cities have achieved high occupancy rates, and tenant sales have rebounded.

However, the increase in retail property income only offset the decline in office rental income. Office rents decreased by 9% to HKD 814 million (2024: HKD 895 million), mainly due to rent reductions on renewal.

Sun Hung Kai Properties stated in its results that the mainland office leasing market faces challenges, with rents and occupancy rates still under pressure.

Latest data shows that the ITC Tower in Xujiahui, Shanghai, has an occupancy rate exceeding 80%, with room for further improvement.

The company also owns other landmark office buildings in Shanghai, including the Shanghai IFC in Pudong and the Shanghai World Trade Center in Puxi. Facing fierce competition, the group emphasizes “retaining tenants as the top priority.”

Regarding ongoing projects, the Shanghai ITC Phase 3 is progressing smoothly and nearing completion. Its final components include the 370-meter-tall Tower B, the flagship ITC Maison mall, and the Andaz Hotel at Xujiahui.

As the tallest building in Puxi, Tower B will provide about 2.4 million square feet of premium office space in the Xujiahui CBD, leased to several multinational corporations.

The ITC Maison mall, covering 2.6 million square feet and seamlessly connected to the metro station, is scheduled to open in phases in the first half of 2026, featuring trendy fashion, lifestyle stores, popular restaurants, and takeaway options. With broader visa-free arrangements and simplified tax refund policies, the new mall is expected to attract more visitors.

The Shanghai Xujiahui Center Andaz Hotel, part of the ITC Phase 3 development, will have over 260 rooms and is scheduled to open in March 2026.

This hotel caters to market demand for quality accommodation and enhances the overall amenities of the ITC Phase 3, becoming a one-stop landmark for commerce, shopping, dining, leisure, and entertainment.

Meanwhile, other integrated development projects in key mainland cities are progressing as planned.

The Hangzhou International Financial Center is developing in phases. After the delivery of the Hui Xi office building of about 378,000 square feet in July 2025, Sun Hung Kai Properties is constructing a vibrant shopping mall in Hui Dong, with about 700,000 square feet, scheduled to open in phases from mid-2027, serving residents of the adjacent Guojin Hui Di residential project. The nearby Central Park is set to open in 2026, providing green space for the community.

The Guangzhou Global Trade Center and Guangzhou South Station are seamlessly connected, with the first phase of commercial development expected to be completed in the second half of 2026. The Tianhe·Guangzhou South Mall, with about 215,000 square feet, will host restaurants and leisure brands. Building 1 of the Guangzhou Global Trade Center, with about 291,000 square feet, has some floors pre-leased to international hotel brands.

Property Investment Business Slightly Fluctuates

Unlike the growth trend in property development, Sun Hung Kai Properties’ property investment income in Hong Kong and mainland China experienced slight declines.

In Hong Kong, the overall occupancy rate of the investment portfolio remains high, providing stable recurring income. However, including contributions from joint ventures and associates, total rental income was HKD 8.797 billion, slightly down from HKD 8.813 billion last year. Net rental income decreased by 1% to HKD 6.265 billion.

According to a report by First Pacific Davies, Hong Kong’s Grade A office leasing market in 2025 showed a clear selective recovery, with strong absorption but notable polarization in regional and property quality.

The overall vacancy rate rose to a record 15.5% in December 2025, but segmented data showed that core Central Grade A offices maintained steady occupancy, contrasting sharply with the high vacancy and oversupply in East Kowloon.

The vacancy rate in Central fell by 1.9 percentage points to about 11.3%, further solidifying its status as a safe haven; in East Kowloon, vacancy increased to approximately 24.5%, indicating structural oversupply and shifting tenant preferences.

Amid this, combined with demand from financial sector upgrades and internal expansion, Sun Hung Kai Properties’ IFC in Central saw occupancy rise to 98%, and ICC in West Kowloon maintained a high occupancy of 91%. Office portfolio income remained stable at HKD 2.834 billion (2024: HKD 2.847 billion), supported by high occupancy.

The slight rise in occupancy rates, along with modest rent adjustments, suggests that the company adopted more flexible pricing strategies during the period, helping to sustain strong leasing results.

Retail property income also declined slightly, recording HKD 4.535 billion (2024: HKD 4.593 billion), a 1% decrease mainly due to rent reductions.

However, several projects have adopted different strategies to attract customers.

For example, in Sha Tin, Hong Kong, New Town Plaza successfully launched Dinosaur Park and Chill Park, and in November last year, the outdoor sky garden NTP Sky Garden, covering about 40,000 square feet, opened. The garden features seating, photo spots, and a fountain show, enriching offline visitor experiences.

In East Kowloon, the Scramble Hill shopping mall, with about 500,000 square feet, began phased openings in the second half of 2025. It aims to attract local residents and office workers with spacious leisure areas and outdoor dining, creating synergy with nearby APM Mall and the City of Dreams office complex.

Additionally, the Tianxi TianMall in Kai Tak, covering about 220,000 square feet, will open in phases starting from the end of 2025. The first tenants, including restaurants and shops, have already opened on floors connected to the MTR Kai Tak Station, serving daily needs of residents and visitors.

These new projects are expected to generate additional revenue for Sun Hung Kai Properties. With diversified formats and targeted marketing, they are likely to significantly boost foot traffic and rental yields, further strengthening the company’s market position.

The mainland investment property portfolio includes rental income from joint ventures of HKD 3.098 billion (RMB 2.825 billion). Net rental income increased by 1% to HKD 2.4 billion. Retail property income increased about 5% to HKD 2.1 billion (2024: HKD 2.007 billion), mainly due to higher turnover rents.

Overall, the mainland property investment business performed slightly better than Hong Kong.

It is noted that Sun Hung Kai Properties’ retail portfolio in mainland China mainly consists of shopping malls, covering nearly 9 million square feet, which is the main source of rental income.

Since the second half of 2025, high-end consumption has shown signs of recovery. Sun Hung Kai Properties in mainland China has launched various initiatives in key projects such as the Shanghai IFC Mall, Nanjing Golden Center, Beijing APM, and Guangzhou Tianhe and IGC malls, aligning with market trends and catering to consumer demand for quality and experiential retail. These include promotional activities and tenant sales.

Thanks to these efforts, major malls in first-tier cities have achieved high occupancy rates, and tenant sales have rebounded.

However, the increase in retail property income only offset the decline in office rental income. Office rents decreased by 9% to HKD 814 million (2024: HKD 895 million), mainly due to rent reductions on renewal.

Sun Hung Kai Properties stated in its results that the mainland office leasing market faces challenges, with rents and occupancy rates still under pressure.

Latest data shows that the ITC Tower in Xujiahui, Shanghai, has an occupancy rate exceeding 80%, with room for further improvement.

The company also owns other landmark office buildings in Shanghai, including the Shanghai IFC in Pudong and the Shanghai World Trade Center in Puxi. Facing fierce competition, the group emphasizes “retaining tenants as the top priority.”

Regarding ongoing projects, the Shanghai ITC Phase 3 is progressing smoothly and nearing completion. Its final components include the 370-meter-tall Tower B, the flagship ITC Maison mall, and the Andaz Hotel at Xujiahui.

As the tallest building in Puxi, Tower B will provide about 2.4 million square feet of premium office space in the Xujiahui CBD, leased to several multinational corporations.

The ITC Maison mall, covering 2.6 million square feet and seamlessly connected to the metro station, is scheduled to open in phases in the first half of 2026, featuring trendy fashion, lifestyle stores, popular restaurants, and takeaway options. With broader visa-free arrangements and simplified tax refund policies, the new mall is expected to attract more visitors.

The Shanghai Xujiahui Center Andaz Hotel, part of the ITC Phase 3 development, will have over 260 rooms and is scheduled to open in March 2026.

This hotel caters to market demand for quality accommodation and enhances the overall amenities of the ITC Phase 3, becoming a one-stop landmark for commerce, shopping, dining, leisure, and entertainment.

Meanwhile, other integrated development projects in key mainland cities are progressing as planned.

The Hangzhou International Financial Center is developing in phases. After the delivery of the Hui Xi office building of about 378,000 square feet in July 2025, Sun Hung Kai Properties is constructing a vibrant shopping mall in Hui Dong, with about 700,000 square feet, scheduled to open in phases from mid-2027, serving residents of the adjacent Guojin Hui Di residential project. The nearby Central Park is set to open in 2026, providing green space for the community.

The Guangzhou Global Trade Center and Guangzhou South Station are seamlessly connected, with the first phase of commercial development expected to be completed in the second half of 2026. The Tianhe·Guangzhou South Mall, with about 215,000 square feet, will host restaurants and leisure brands. Building 1 of the Guangzhou Global Trade Center, with about 291,000 square feet, has some floors pre-leased to international hotel brands.

Disclaimer: This content and data are compiled by Opinion based on publicly available information and do not constitute investment advice. Please verify before use.