Good afternoon, ladies and gentlemen. Welcome to Sun Hung Kai Properties FY 2019's annual result briefing. As usual, I will walk you through the key financial figures of the results and the latest business development. Then we will open the floor for Q&A sessions with our top management. I hope you will find the briefing useful, and I would like to take this opportunity to wish you and your family a happy, peaceful and enjoyable Mid-Autumn Festival. Thank you. Now let me kick start my presentation. This slide gives you a quick snapshot of the results. First of all, we have achieved a decent set of results with underlying EPS growth of 6.6% to HKD 11.80. Secondly, as we committed, we will pay higher dividend if underlying earnings is higher. As such, together with interim dividend, the full year dividend per share will increase by 6.5% to HKD 4.95.
Last but not least, our balance sheets remain strong, and our prudent financial management policy help us to maintain a relatively low gearing ratio of 12.9%, which will enable us to weather through unforeseen circumstances. Now, let's look at the key financial figures, and please note that all figures are in Hong Kong dollars, unless otherwise stated. For this financial year, the group achieved underlying net profits of around HKD 32.4 billion, representing 6.6% year-on-year growth. The growth was mainly driven by high profit from property sales as well as rental income. As mentioned, the underlying earnings per share increased by 6.6% to HKD 11.80, while reported earnings per share declined by 10% to HKD 15.50 due to lower revaluation gains on investment property this year. A final dividend per share of HKD 3.70 has been recommended by the board, and the full year dividend per share will be HKD 4.95, as mentioned.
Let me go through the profit breakdown by segment. Our rental portfolio continued to deliver healthy performance with net rental income of over HKD 19 billion, up 5.5% year-on-year. In Hong Kong, we achieved year-on-year growth of 5.7% in net rental income. In Mainland China, the net rental income grew at 6% year-on-year growth, and the growth rate would be 11% in RMB terms. Property development profits grew by 15% year-on-year to over HKD 18 billion, to which Hong Kong contributed around 88% of the total. The profit from hotel business was down by 2.5% year-on-year, partly due to the pre-opening expenses for Hotel VIC, which has been rebranded as Hyatt Centric Victoria Harbour Hong Kong. Our other business contributed around HKD 4.6 billion to the group, and the total group's operating profit amounted to HKD 44.4 billion, up around 8.6% year-on-year.
As discussed, our balance sheet remains strong as reflected by a relatively low gearing ratio of 12.9% and high interest coverage of over 14x . Let's move on to the property business in Hong Kong, and I will talk about the land bank first. As at 30 June 2019, the group's total land bank in Hong Kong was around about 58 million square feet of attributable GFA, of which 33 million square feet was completed properties and 25 million square feet was property under development. For the completed properties, 36% of them are shopping centers and 31% are offices. For the properties under development, around 21 million square feet of attributable GFA is for residential use, of which around 2.5 million square feet has been sold.
During the year, the Group had seven projects with over 3.1 million square feet of attributable GFA, which include a data center, acquired by SUNeVision for its business expansion. Apart from this, most of the projects will be developed for residential use. In addition, the Group reached a lease modification agreement to redevelop an industrial building in Tsuen Wan into a residential project, which will offer a GFA of 168,000 sq ft. Let's move on to our rental portfolio in Hong Kong. Driven by positive rental reversion, the Group's gross rental income in Hong Kong grew by 6.4% year-on-year to HKD 19.7 billion. Our shopping malls portfolio accounted for 54% of total rental income and registered a year-on-year growth of 7.5%, while our office portfolio grew 5.4% year-on-year and contributed 33% of the total rental income. The overall occupancy rate of rental portfolio was about 94%.
During the year, the Group's 12 million square foot diversified retail portfolio continued to perform satisfactorily with positive rental reversions and reasonable occupancy cost. However, the operating environment has been deteriorating in recent months amid weakening consumer sentiment and declining tourist spending. To deal with it, we continue to adopt a proactive approach to managing our malls. For example, we shall enhance The Point by SHKP, which integrated the loyalty programs of the Group's 15 major malls by devoting more resources into marketing campaigns to drive traffic and tenant sales. In July this year, V Walk, a shopping mall underneath the Group's Cullinan West residential development at MTR Nam Cheong Station is open. It provides nearly 300,000 sq ft retail space and is almost fully leased. Let's move on to our office portfolio in Hong Kong.
During the year, the Group's 10 million square foot office portfolio continued to experience positive rental reversion, with overall occupancy standing above 95%. Going forward, there will be additional contribution from new properties for investments to the Group's recurring income. By the end of this year, Harbour North in North Point, which is the 145,000 sq ft retail component of Victoria Harbour development, is targeted to open gradually. Looking further ahead, the completion of 98 How Ming Street in financial year 2023 will further scale up the Group's presence in Kowloon East. Let's turn to our property development business in Hong Kong. On property development business in Hong Kong, the Group has adopted new accounting standard, HKFRS 15, for recognitions of property sales. And based on the new accounting standard, the Group has recognized property sales of HKD 36.5 billion with operating profits of HKD 16.4 billion during the year.
Major contributors including Cullinan West II, Victoria Harbour Phase 1, St. Barths , Lime Gala, et cetera. As at end of June 2019, over HKD 47 billion contract sales are yet to be recognized. For contract sales, we achieved nearly HKD 60 billion in Hong Kong during the year, which was an exceptionally high number. Major contributors are shown in this table. As usual, we will continue to put new projects on the market once they are ready for sale. As shown in this map, upcoming launches in the next nine months will include a wide range of projects across the territories, including the Cullinan West Phase 3 and Tin Shui Wai Project Phase 1. The purple box on the top right-hand corner represent a non-residential project for sales in Tsuen Wan. On top of this, we shall continue to sell remaining units of previously launched projects.
This concludes my discussions on the property business in Hong Kong. Next, I will go through our property business in Mainland China. As at end of June 2019, the Group's attributable land bank on the Mainland stood at around 65 million square feet. Of this, nearly 15 million square feet was completed properties and about 51 million square feet were properties under development. For completed properties, 50% and 33% of them are shopping malls and office respectively. For property under development, 56% will be developed into quality residency for sale. In August this year, the Group acquired two adjacent riverside sites in Qianjiang New City CBD in Hangzhou via government tender. If including these two new sites, the Group's total land bank would be close to 70 million square feet . The next slide will show you more about the Hangzhou site.
The Group is pleased, joint ventured with Ping An to acquire this Hangzhou site. Adjacent to two metro station under construction, this site will be jointly developed as a landmark integrated project with high-end residence, offices, retail space and hotels, providing a total above ground GFA of around 9 million square feet. In the Greater Bay Area, we also acquired two adjacent sites in Nansha Free Trade Zone in Guangzhou in May last year and February this year. With direct access to Qingsheng Station of the high-speed rail and the Guangzhou Metro line, both sites will be jointly developed in phases into a 3.3 million square foot integrated transit-oriented development. Now let me walk you through the performance of the Group's rental portfolio on the Mainland.
For the year, the Group's gross rental income from Mainland increased 4.7% year-on-year to HKD 4.7 billion or around 10% in RMB terms, and it represents around 19% of the Group's total gross rental income. The healthy growth was driven by positive rental reversion and contribution from new investment properties, partially offsetting by RMB depreciation. Rental from shopping malls accounted for 56% and office 37%. In Shanghai, the Group's landmark integrated developments, namely Shanghai IFC in Pudong and Shanghai ICC in Puxi, continued to record positive rental reversion. Particularly, Shanghai IFC Mall , registered high tenant sales after the completion of the renovation on the ground level. Another iconic integrated complex, Shanghai ITC, which is first milestone with the first two phases completed. Overall occupancy of the office at One ITC and Two ITC stood at over 90%.
The virtually fully leased grand luxury mall at One ITC will be opened by end of this year. Construction work at the remaining phase is progressing smoothly and is expected to be completed by the end of 2023. In addition to Shanghai ITC, Nanjing IFC is the Group's another new additions of integrated commercial projects on the Mainland. The 500,000 sq ft office tower, namely Nanjing One IFC , has recently been completed with some tenants already moved in. While the construction work of Nanjing Two IFC office will be completed in 2020. The leasing construction of the 1.1 million square foot luxury mall is currently underway. Besides, New Town Plaza in Beijing held its grand opening in July this year. This reconfigured mall has been virtually fully leased with over 120 renowned brands.
On property development business in Mainland China, the group recognized property sales of HKD 4.8 billion, down 23% year-on-year, mainly due to less booking of high-end residential projects than last financial year. However, profitability was improved, which helped compensate for the decline in sales. Major contributors include Grand Waterfront Phase 2 in Dongguan, Shanghai Arch and Oriental Bund in Foshan. As at end of June 2019, around HKD 4.7 billion contract sale are yet to be recognized. On contract sales, the group achieved attributable contract sales about RMB 4.6 billion during the year. This table here highlights the major launches on the Mainland in the next nine months. It includes Shanghai Arch Phase 2 , and the brand new project, Residence at Suzhou ICC. Moving on to the hotel business. The group's hotel portfolio performed relatively steady during the year. However, operating environment has been deteriorating in recent months.
As discussed, operating profits was lower, partially due to the pre-opening expenses of Hotel VIC and softening of the market condition in the recent months. To look ahead, we are scheduled to open ALVA HOTEL BY ROYAL in Shatin late this year, and the construction works of the hotel project on West Kowloon Waterfront is underway. That's cover our business update. Let me share with you the market prospect. The Hong Kong economy is likely to remain weak in the short- term, given a slow global economy and unprecedented internal challenges. The primary residential market is likely to be supported by the relatively low mortgage rates and continuous end-user demand despite softening market sentiment. On office, leasing inquiries are likely to slow in coming months, yet tight supply in the core areas should help cushioning the downside risk.
On retail side, the weakening consumer sentiment and declining tourist arrivals have posed challenges in the retail markets, especially the strip shops in tourist areas. However, rents in well-managed malls will outperform those in strip shops. On the Mainland, despite the continuous Sino-U.S. trade conflicts, its economy is expected to grow at a reasonable rate on the back of monetary and fiscal stimuli. On primary residential market in key cities, city-specific housing policy will lead to vary city-by-city performance. However, end-user demand is likely to underpin the transaction volume. In the office market, we expect quality Grade A office buildings at prime location in major cities to continue to attract multinationals and Mainland companies. The retail market on the Mainland is expected to see healthy growth, supported by plans boosting domestic consumption. Let's talk about our business prospect.
As for the business prospect of the group's property investment business, the uncertainties of late have weighed on the overall leasing activities in Hong Kong. In order to help driving the traffic and tenant sales at our shopping malls, we shall further boost our shoppers' experience by devoting more resources into marketing campaigns via The Point by SHKP. Beside, there will be additional contribution to our recurring income from new developments in both Hong Kong and Mainland China in the next few years. In addition, we continue to seek disposal opportunities for non-core property. As for the business prospect of the group's property development, we shall continue to put new projects on the market once they are ready for sale. Besides, we have already pre-sold 70% of GFA planned for sale in Hong Kong, which is scheduled for completion in the next financial year.
Our existing land bank is sufficient to meet our medium-term development needs. With strict financial discipline, we shall seek land acquisition opportunities in both Hong Kong and Mainland China when good opportunities arise. Finally, I would like to share with you a message extract from the Chairman's statement to wrap up my presentation today.
With an unwavering faith in Hong Kong, the group is confident of being able to weather the current tough and challenging environment and move forward as it has come through the storms and gloom with this city over the decades. Thank you very much for your attention. Please join me to welcome the top management to come up on stage for the Q&A session. Thank you.
Before we continue, I would like to introduce the panel to you. From your left, Mr. Brian Sum, whom you have already met. Mr. Christopher Kwok, Executive Director. Mr. Allen Fung, Executive Director. Mr. Victor Lui, Deputy Managing Director. The center is Mr. Raymond Kwok, Chairman and Managing Director. Mr. Mike Wong, Deputy Managing Director. Mr. Adam Kwok, Executive Director. Mr. Eric Tung, Executive Director. Mr. Frederick Li, Group Chief Accountant. The question- and- answer session will now begin. Please signal for the microphone if you want to ask a question. Also, please identify yourself and the name of your company before starting your question. Video of today's briefing will be uploaded on our corporate website. May I now invite the first question, please?
Hi. It is Ken Yeung from Citi. I have three quick questions. First, on Hong Kong residential. Recently, I see, Victor, you have launched the prices of Cullinan West III, which is quite cheap, HKD 21,700. I just want to ask about, is it the strategy that Sun Hung Kai is going to launch at a cheaper price or basically in order to boost sales? Or you think that there may be some potential that- How should we think about your pricing regarding your sales strategies? The follow-up question is, if you are bearish, if you are positive, do you think that this is a good opportunity to buy land now, which other peoples have been quite scaled back? This is the first question.
I think the second question is, a lot of clients are interested in the recent appointment of your new INED, Wu Xiang-dong . Should we expect that there may be more synergy to be adding on the China investment property side with his appointment? Lastly, can you update us your China tenant sales?
Sorry, China?
Retail sales for your Shanghai malls or
Yes, on the residential market, I think we all know that the primary market is a bit affected by the trade war and the recent social incident. However, I think market is still resilient as we can see a number of projects recently launched are quite well-received, proving that basic demand is still very strong. In fact, the prevailing low interest rate with reasonable repayment affordability will continue to induce more people, especially renters, to buy. Due to the increasing uncertainty of other financial instruments, I think more people are willing to allocate their wealth on properties. We all know that market have been very strong in the past six months, and recently market is a bit affected by various factors. For the first price list we are releasing on Cullinan West, I think it is acceptable by most of our buyers.
We are really confident that we can have some room to increase our price in the future launches.
I will pick up your question on Wu Xiang-dong . Christopher, can you answer the question about China retail sales first?
Yeah.
Okay. China retail sales. Do you want to answer that?
Okay, sure.
Yeah.
Yes, I think we are happy to report that for the most recent quarter, quarter two in 2019, I think all of our shopping malls in China have seen either high single- digit or double-digit growth in sales. Also in terms of for the financial year of 2018 and 2019, we have seen double-digit growth in the rental income for our retail properties in China. I think even though there are obvious global economic uncertainties like the U.S.-China trade war and the slowing economy, I think those are expected to persist. I think at the same time, we also see that the Chinese government has been rolling out a series of stimulus measures to boost domestic consumption. For example, in terms of cutting down the import tariff and reforming the VAT, also a new e-commerce law that was legislated last year.
I think these are all very conducive to stimulating domestic consumption. I think for us, we see that the luxury market remains quite upbeat, especially in the bigger cities like Shanghai and Beijing. I think going forward, we remain cautiously optimistic, also explains why we also continue to invest in China.
On Wu Xiang-dong , I have known him for 15 years. In fact, we had joint venture with him when he was with China Resources Land. He is the best developer, in my view. He has built up the portfolio of the [China Resources mix]. Our joint venture with China Resources Land happens to be in Hangzhou. The mix project, I think he is the best developer for integrated project, especially for malls. We are so glad that he could join us as INED . We have 20% of our assets on the Mainland, and we want to build more integrated projects. He will be very helpful to advise us on the market on the Mainland, also about the politics of how to deal with the local authorities. So he is a very valuable asset for us now that he is our INED . Thank you.
Thank you, Mr. Kwok. Next question, please.
Hi. This is Raymond Liu from HSBC. I got three questions. The first question is about dividend. At the moment, only very few Hong Kong property companies increased the dividend during the latest results due to the challenging business environment. The question to the management is that, are you confident about your business outlook that will be continually, gradually increase your DPS in the next two to three years? Or in any situation that will company consider to cut your dividend? This is the first question on dividend. The second question is about residential Hong Kong property development business. Last year was an exceptionally great year. Contracted sales hit a record high of HKD 60 billion. But is this a sort of one-off event, or do you think it is sustainable? In that perspective, will you consider to revise your medium-term annual sales target?
Just second question. The last question is about the retail sales in the business in Hong Kong. Can you share with us the retail sales performance in July and August? What would be the upcoming leading strategy or performance or outlook in the next 12 months time? Thank you.
Can you answer the second one?
Yes, sure.
From Hong Kong market.
As we know, we have achieved very good contracted sales in last financial year. In the coming nine months, apart from Mount Regency, which we have just sold, and with most of the units being sold out within a short period of time, we are now putting Cullinan West Phase 3 for sale. While our project in Stubbs Road, Central Peak , our [sale flat] will be completed very soon, and we can put a few units for tender very soon. At the end of the year, that would be our Wetland Park site and together with our industrial site in Tsuen Wan. In next year, we have two essential project for sale, namely the Tuen Mun South project and also the Sha Tin premium project in the Hilltop. Again, you can see we have a lot of projects for sale in the coming nine months.
We must admit that last financial year is exceptional good year for us, because our construction progress and the issuance of the sales consent are better than expected. Although this may differ in this year, if ample marketing resources, we are confident that in medium- term in Hong Kong, we can achieve an average annual sale of HKD 40 billion.
On the issue about the dividend, our earnings per share has gone up 6%. That's why our dividend per share has gone up 6%, too. Our dividend policy is to pay 40%-50% of our profits. We'll try to keep within this range. Therefore, if earnings per share go up, our dividend per share will go up. If our earnings per share go down, then we'll try to maintain the dividend as long as it's staying within the range of 40%-50%. On your question about retail sales, of course, I think August was a bad month for some of the malls, but not for all our malls. Because for some of the regional malls that are not affected by the protesters, the sales are still okay. I think, of course, for malls like New Town Plaza and IFC, it's a bit impacted by the protesters.
Regarding the tenants, of course, they are not doing that well in July and August. But for the first six months of the year, they are achieving good growth in sales for the first six months. Therefore, I think we have to continue to observe who are doing well, who are not doing well. But of course, for the tenants that are basically that they have a bad business model, we can't help them that much. But for the tenants that are genuinely doing well and are trying their best, we'll try to help them a bit. Thank you.
I think, on that point, I think our occupancy cost is also quite reasonable. It's kind of in the mid-teens right now. So I think we have a solid base of rental income, so it's a good buffer if the situation persists. Yeah.
Thank you, Mr. Kwok. Next question.
This is Praveen Choudhary from Morgan Stanley. Couple of questions. One is on buyback and one is on your business overseas. The stock is currently trading at 0.6x price to book after the new revaluation gain than you have disclosed. The use of cash, considering your gearing is pretty low at 12% or so, instead of buying land versus buying back strategy, how do you decide which one to do? Would you consider buying back your stock? The second question is about diversification away from China and Hong Kong. Pretty much most of the business is in China and Hong Kong at this point in time. Considering all the political situation, would you be considering some diversification either in Singapore or any other market? Thank you so much.
Regarding the buyback, we are trading at 0.6x book, but all our peers are, except for MTRC . I think we have to look at the business from the long-term point of view. We have to keep our good people. The best way to keep good people is to continue to buy good land. You are right, I think there will be opportunities to buy land in Hong Kong and also on the Mainland. I do not envisage us buying back shares. Also, we are glad that our leverage is 12.5%. This is the moment of time that we need to make sure that we have enough dry powder in case the market gives us good opportunities. Regarding business overseas, I think we will stay in Hong Kong and on the Mainland because this is a market we are familiar with.
We have built up our human resources over time that are very familiar with these two markets. In Singapore, we have one project. But I think on this ION Orchard , which Eric Tung has done, but in Singapore, there is so much competition to buy land. The margin definitely is much less than in Hong Kong and on the Mainland. So, at this moment of time, we intend to continue to invest in Hong Kong and on the Mainland. Thank you.
Thank you, Mr. Kwok. Next question.
Karl Choi from Merrill Lynch. Three questions. First one on farmland, because there is recent speculation around the government may use the Lands Resumption Ordinance to resume some of the farmland from developers for building public housing. If that is the case, will Sun Hung Kai be cooperative in the land resumption scheme? Actually separately, one of your peers recently sold a farmland to a third- party. Can I check if there is any demand or any inquiry on Sun Hung Kai's farmland from third- party as well? Second question is more about pricing. We all know about the pricing of Cullinan West III now, but how about the inventory projects, especially those in Yuen Long? Would you be considering cutting price to churn the assets? Last question on hotel.
Could you update us on the latest hotel room rates and occupancy, maybe in July and August versus the first half of this year? Do you have any measure to make your hotel portfolio in Hong Kong more cost-effective under the current situation? Thank you.
On farmland, I think I can.
[Non-English content]
Let me start off by saying the Henderson price they sold was, of course, at a very good price. If we can find a buyer like this, for sure, we will consider. Please introduce some buyers to us.
On general scene, on the condition of farmland, we've been doing very proactively and actively over the past decades. I mean, few decades. Just for the past three years alone, we have converted 9 million square feet site area, 8 million square feet floor area into 15.
Thousand
15,000 units. We will continue our pace to apply for our land. In fact, 2/3 of our land holding in NT, under various stage of application to government to turn the agricultural farmland into active use, and mostly the majority of those are for residential units. One point we would like to highlight is that we are facing an issue that no matter how good is the location, proximity to the station, the permitted plot ratio is pretty low, something like even 0.2, 0.41. I think we are actually making a very active preparation work to propose to government to turn those relatively underutilized land into more intensive use to provide more number of affordable housing to meet the acute demand of this community. This is the first point.
I think Adam has dealt with the sale of farmland by the peers and the price for I think Cullinan West, I think, Victor, you can handle that.
Yes. Actually, I want to answer the question on the Yuen Long project. Actually, we don't have any pressure on price reduction at all. Especially PARK YOHO , which we are now delivering vacant possession to our purchaser. All of them are very happy with our building quality and the environment. Actually for the latest phase, we only have around less than 300 units on hand. We are going to launch these units very soon. On the contrary, we have some room to increase our price further.
On the question about farmland, I would like to add that we don't want to build 0.2x . We don't want to build houses. We want to build more housing for the middle class. That's why I think- On most of our agricultural land, we are launching our application to ask for more intensive development, so that we won't waste the land by just building houses for the rich. We want to cater more for the middle class. We feel we have obligation to build more for the middle and the lower income class. On the hotel, of course, I think August was a terrible month. In fact, some luxury hotel only had 50% occupancy. But that's a problem with all the travel warning issued in Europe, and Japan, and U.S.
Of course, I think we'll have to discuss with our hotel managers on how to cut down our costs. That's the only way that we can achieve breakeven or above breakeven. Hopefully, the violence in Hong Kong will be curbed and then more people, more Mainland Chinese and more Westerners will come back to conduct their business. Thank you.
Yeah. Can I also add one thing on farmland? I think this is actually a really good time for the government to speed up and up zone the farmland, as I think we have seen some increased effort and urgency from them. You can see that even in our latest in Sai Sha that we have submitted around- We've got approval around six months ago. We got a 20% increase in plot ratio on top of units increased to 9,000 units from around 4,500. We are also submitting similar cases with up zoning. I think the government has actually showed more urgency in processing it. So I actually think it's a good time. In terms of Lands Resumption Ordinance, I think there may be some confusion among the analyst community. I think Mike can get a whole day of lecture on this.
To keep it very simple, it's actually nothing new. The government has been using Lands Resumption Ordinance, fulfilling the public purpose for many, many years, even in the British times and now. They have done it with a clear purpose that if it is to build public housing, or it is to build what we call GIC, government stuff, schools, hospitals, elderly center, or roads, they could use it for public purpose. We have in the past, due to that, surrendered the lands. In the future, we see that that is also what's going to happen. So it is actually nothing new.
I think you guys need to understand that the Lands Resumption Ordinance, I think a lot of our projects already have zoning for private housing or has already been approved by Town Planning Board and so on. Some even already it's in final stages of negotiation. I think for government to resume those and then auction it out or otherwise, when we already have a clear progress and we are already almost there, I think doesn't stand up against the Basic Law of protection of property, nor does it stand up to the public purpose ordinance. I think even yesterday as the DAB, Man Kin-ming, was talking about it, they also acknowledged this fact. They are for resumption of land with already public zoning, with already publicly zoned land. That's always been the historical practice as well. So it's actually nothing new.
Thank you, Mr. Kwok. For the interest of time, may I invite the last question, please? Gentlemen in the fourth row.
Justin Kwok with Goldman. Perhaps the last few questions. One on the office side. A quick comment on what you are seeing in the leasing market at the moment. Do you sense that the multinationals are taking more cold feet on Hong Kong at the moment or being likely to contract? How is the renewal for the two anchor i-banks and ICC at the moment? The second question is actually on Hangzhou. It is actually interesting to see that you are expanding the city. Do you expect more of these opportunities to come out in the midst of the credit tightening in China and where you are also more likely to get on with a joint venture, which is something new, I guess, in the way you do the business? Perhaps the last question is actually on SUNeVision. I have noticed that you have announced an asset swap with this subsidiary.
Can I check in what is the rationale on this and what you expected out of that? Thank you.
ICC and [audio distortion]
Yeah. Although the trade war and the possible economic slowdown in both Hong Kong and China have resulted a weakened office leasing demand starting from Q4 last year. But we can see that Central still hold up well due to limited available space. In fact, vacancy in Central is only around 2.5%, which is manageable. New supply will only come up in three to four years' time. We can see most of the Grade A buildings in Central are still in high occupancy and like One and Two IFC, we are fully let. For ICC in Tsim Sha Tsui, actually, we are doing premium rent in the whole locality. I think the whole area will further boost by the high-speed rail link and also the future West Kowloon Cultural area. We have just having a positive rental revision with some of our major tenants.
Looking at the current leasing performance on most of the Grade A buildings in Core Central and Tsim Sha Tsui, we don't see any trend of MNC moving out of Hong Kong.
We hold a very positive prospect of Hangzhou City. It's part of the Yangtze region, and we have been actively looking for opportunity in Hangzhou for the past few years. Now that we are very fortunate to find a good partner, Ping An Real Estate, which we are going to sort of hand in hand to execute this project, and we believe they have very good knowledge of the Chinese real estate market. The project, probably you are aware of the details, which is going to be a 9 million square feet project comprising residential, service apartment, hotel and offices, both for sale and both for long-term investment or long-term rental. It's a Waterfront site abutting the front end of Qiantang and across two subway stations. We have a very bright prospect of the development of this site. Incidentally, this site is just across Qiantang .
It's going to be the new city hosting the Asian Games in the year 2022, so that the whole area will be energized, and whole Hangzhou City will have a new phase in the few years to come.
On the proposed asset swap between Sun Hung Kai and SUNeVision, we think it is a transaction that is beneficial for both Sun Hung Kai and SUNeVision. The Sha Tin Centre is now completely revitalized to be a data center. It makes a big difference, in our opinion, for SUNeVision to manage the operations of the building as well. Actually, you see that most of the data centers we do, actually we own ourselves, because actually you manage it better and you develop better quality of service to your customers. In fact, several of our global customers prefer this arrangement. In return, Sun Hung Kai gets back two investment properties, which are more core to Sun Hung Kai than to SUNeVision. I think, as you can tell, the group strongly supports SUNeVision.
You can hear from the term loan we got a few months ago. Also, in general, it is very simple, the logic. We are a big majority shareholder of SUNeVision. Anything in our view that accelerates the growth of SUNeVision is not just beneficial to SUNeVision, but also very good for Sun Hung Kai as well. That is the spirit in which we carry out this transaction.
Thank you, Mr. Fung. Ladies and gentlemen, thank you for coming. Hope you enjoyed the presentation and find it useful. There are some refreshment outside. Please stay and enjoy. Thank you very much, and see you next time.