Wharf, REIC warn of rare losses as Hongkongers’ northbound sojourns add to retail slump

Two of Hong Kong’s biggest property developers warned that they may report losses in the first six months of 2024, as dwindling foot traffic at their Harbour City and Times Square shopping centres underscored the sorry state of the city’s retail slump.

The Wharf (Holdings) and Wharf Real Estate Investment Company (REIC) both expect “possible turnarounds” from profits to losses in their first-half results, the companies said in filings to the Hong Kong stock exchange on Monday.

Wharf REIC may report a first-half loss of at least HK$900 million (US$115.2 million) when it reports its results on August 6, compared with the HK$1.8 billion profit last year, the company said. Its stock fell 1 per cent to HK$19.24, the lowest price on record.

Wharf may swing to a first-half loss of between HK$2.5 billion and HK$2.8 billion in its results on August 11, the company said. Losses from the revaluation of its property portfolio, both “non-cash and unrealised”, may exceed the group’s underlying profit, Wharf said. The company’s stock fell 7.1 per cent to HK$22.90, the biggest one-day percentage drop since November 2022.

The rare warnings show how Hong Kong’s consumption slump is trickling down to the bottom lines of the city’s shopping centre operators and landlords. Retail sales shrank by 11.5 per cent in May to HK$30.5 billion, the second month of double-digit percentage decline, according to the city’s Census and Statistics Department.