Retail sales may be dropping in Hong Kong, but mall operator The Link REIT remains confident about its future.
The Link has reported a nine per cent year on year increase in net property income to HK$5.67 billion for the year to March 31 prompting a 10 per cent increase in its full year distribution.
While the company largely operates in Hong Kong, it has one asset in Beijing, EC Mall, which is operating at the same level of return as its home market assets, with rent rising about 22 per cent.
“The leasing contracts of one third of the shops there will be renewed either this year or next year, giving us a chance to raise rents and adjust the shop portfolio,” said Gary Fok Yip-sang, director of The Link’s China asset management.
The Link bought the China mainland mall In March, for 2.5 billion yuan (HK$3.1 billion) and remains open to further opportunities across the border. It believes such diversification will buffer it from any further downturn in Hong Kong.
The company is discussions to buy more mid-end malls in Beijing, Shanghai, Shenzhen and Guangzhou.
Back home, the company says it is not discouraged by falling retail sales because Hong Kong’s residents’ demand for day to day necessities is holding firm.