Welcome to Sun Hung Kai Properties FY 2018 annual result briefing. I am so glad that we are able to hold this briefing as scheduled. As we know that Typhoon Barijat just passed us yesterday, and you all know that by the end of this week, there is another even stronger typhoon may hit us. I am really, really grateful that we are able to meet you all here today, so we do not need to reschedule everything. Let us enjoy the briefing this afternoon. As usual, for the next 20 minutes, I will walk you through the key financial figures about the result and the latest business update, and followed by a Q&A section with our senior management. Let us kick start my presentation with some of the key message that I would like you to note. FY 2018 was another fruitful year for the group.
First of all, we achieved impressive contract sales in Hong Kong, far exceeded our full year targets of HKD 36 billion. We expected our property sales in Hong Kong to remain strong in FY 2019. Besides, we have a sizable and growing rental income stream, which is supported by the group performance of our existing rental portfolio, proactive AEIs, and well-planned new additions in the pipeline. With the good result from both development property for sales and rental business, I am pleased to tell you that the board has recommended a final dividend of HKD 3.45 per share. Including the interim dividend, the full year dividend per share will be HKD 4.65, representing 13.4% year-on-year increase. Based on our share price today, the dividend yield of our share is over 4% now. Going forward, we aim to maintain sustainable dividend.
As of the date, we have sizable land bank of a relatively low average cost, which is sufficient for our development needs in the next five to six years. We will continue to acquire lands with satisfactory expected return through different means, including farmland conversion. Hong Kong and major cities in mainland China continue to be our focus. Last but not least, we stick to our prudent financial management principle and maintain a strong balance sheets. Let us look at the key financial figures of the annual results. Please note that all figures are in Hong Kong dollars unless stated otherwise. In this financial year, the group achieved underlying net profits around HKD 30 billion, representing 17% year-on-year growth. The double-digit growth and underlying net profits reflected the strong growth in our property developments for sale, and I will talk more about it later.
Underlying earning per share grew by 17% to HKD 10.49, while reported earnings per share rose by over 19% to HKD 17.24. As discussed, a final dividend per share of HKD 3.45 has been recommended by the board. The total dividend per share will be HKD 4.65. Let me go through the profit breakdown by segment. Property development profit grew by 36.5% to over HKD 16 billion. The strong growth was mainly attributable to the outstanding performance of our Hong Kong property sales. Our rental portfolio continued to deliver healthy performance with net rental income of over HKD 18 billion, up 9% year-on-year. In Hong Kong, we achieved year-on-year growth of 6% in net rental income, while mainland China recorded over 19% increase. Our hotel business performed much better this year due to improving operating environment in Hong Kong's hospitality industry. The profit from hotel business was up around 11% year-on-year.
Profit from other business is 4% higher comparing to last year. In total, operating profit increased by 18% to HKD 40.9 billion. Regarding our financial position, our balance sheet remains strong as reflected by a relatively low gearing ratio of 12.1% and high interest cover. The high net debt level was mainly due to the land cost paid for the Kai Tak site, which was acquired in May this year. Let's move on to the performance of our key business segments, and I will start with the property business in Hong Kong. As at end of June 2018, total land bank in Hong Kong was 56.5 million square feet, in which 33.8 million square feet were completed properties and 22.7 million square feet were properties under development. Majority of the completed properties are shopping malls and office for rental purposes.
For property under developments, 84% or around 19 million square feet of GFA are residential. Besides, the group also owns about 32 million square feet of farmland in terms of site area. During the year, through different channels, five property sites totaling 6.6 million square feet of GFA were added to our land bank, including the sites in Tsui Hang through farmland conversion and the prime site in Kai Tak City Centre through government tender. For the Kai Tak one, let me talk a bit more about the uniqueness and development potential of the site. We see the Kai Tak site very unique and believe it has the potential to be another successful landmark complex similar to the Kowloon in West Kowloon. In terms of location, it is strategically located in the core area of Kai Tak, Hong Kong's alternative CBD.
The site is right next to the future MTR Kai Tak Station with direct access to it. The residential portion will have the tallest residential blocks in the area, with good sea views from the upper floor. Underneath the residential blocks will be an upscale mall in the podium, which is expected to create a retail cluster with the commercial developments nearby. In the medium term, its accessibility will be further enhanced upon the opening of the Central Kowloon Route, allowing quick access from the West Kowloon to the Kai Tak area. On property development business in Hong Kong, the group recognized property sales of HKD 35.7 billion, 80% higher than last year, mainly driven by overwhelming sales response of Cullinan West in West Kowloon, PARK YOHO Genova in Yuen Long, and Ocean Wings in Tseung Kwan O, as well as sales of remaining units of some luxury projects.
Profitability was much improved, with over six percentage points increase in developments margin to 39%. As at end of June 2018, over HKD 29 billion contract sales are yet to be recognized. During the year, 3.7 million square feet of attributable GFA was completed, including 2.6 million square feet of residential GFA. The remainders are non-residential premises for long-term investment, including Hotel VIC in North Point and V Walk, a shopping mall atop MTR Nam Cheong Station. In the next three financial years, we aim to maintain a completion volume of over three million square feet of GFA on average. During the year, we have achieved impressive contract sales in Hong Kong of over HKD 41 billion, far exceeding the full-year sales targets. We are having a strong sell-through of various project launch during the year. The table here shows the contract sales of major project launch.
Since July, we have achieved contract sales of about HKD 26 billion in Hong Kong, and we sold almost 2,000 units in less than three months. Major contributors include sales from Cullinan West II, St. Martin in Tai Po, PARK YOHO Milano, and Grand YOHO, both in Yuen Long and Wings at Sea II in Tseung Kwan O. Out of the total units sold, around two-thirds are those with occupation permits. Going forward, we will continue to sell residential units from both new launches and launched project aiming at high asset turnover. Here are the projects that we are going to put on the market in the coming nine months. The purple boxes are new residential projects to be launched to the market. The dark blue box refers to the remaining units of launch project.
On top of this, an office project in Sha Tin, highlighted in green, will also be put on the market later. Coming to property rental business in Hong Kong, gross rental income continued to grow steadily and reach HKD 18.5 billion, up 6.1% year-on-year. By segments, the retail rental portfolio achieved gross rental income of almost HKD 10 billion, up 7.2% year-on-year, representing 54% of the total. The office portfolio achieved gross rental income of HKD 6.1 billion, up 4.5% year-on-year, representing 33% of the total. With favorable market condition and our proactive management, our well-balanced retail rental portfolio has done well and achieved positive rental reversions and high occupancy during the year. Retail sales growth at our major shopping malls outperformed the market, and our average occupancy cost stayed at a reasonable level.
To strengthen our competitiveness of our shopping malls, we are consistently looking for ways to provide customer with enhanced shopping experience. In January this year, we launched the SHKP Malls app to provide customers with increased shopping convenience. At the moment, the app has linked 23 of our major malls, and two other malls will be linked in the coming six months. Early next year, we will further upgrade this app to include an integrated loyalty program through which customers can register and redeem points across SHKP Malls on this single platform. Apart from the new app, the group continues to carry out AEIs to enhance our customer shopping experience. New Town Plaza in Sha Tin has completed its first phase of renovation. The newly opened MOVIE TOWN is the largest cinema in the New Territories.
Metroplaza in Kwai Fong has added organic farm and kids play facilities to draw more traffic. In the near term, V Walk atop MTR Nam Cheong Station and Harbour North in North Point are the two major additions to our retail rental portfolio. V Walk will be open in mid-2019. Harbour North, together with the retail outlets of Hotel VIC next to it, will provide a 212,000 sq ft retail cluster in the area. Our premium office portfolio in Hong Kong continued to achieve stable rental income growth and high occupancy during the year, and is expected to benefit from the future growth brought by rapid development in the Greater Bay Area.
With a total GFA of about 1.2 million square feet, the joint venture project at 98 How Ming Street will be a major addition to our commercial portfolio in Hong Kong over the medium term. This development is well underway with foundation work commenced. This concludes my update on our property business in Hong Kong. Let's turn to our property business on the mainland China. As at the end of June 2018, total land bank on the mainland amounted to 64.5 million square feet, in which 50.7 million square feet were properties under development and around 14 million square feet were completed properties. 59% of the land bank under development is residential for sale, while majority of completed properties are shopping malls and office.
Please note that the group has acquired a commercial site of 435,000 square feet of GFA in Nansha Free Trade Zone in Guangzhou in May this year. On property development business in mainland China, the group recognized property sales of HKD 6.2 billion, down 25% year-on-year, mainly due to less GFA book. However, profitability substantially improved, which was more than to compensate for the decline in sales. Major contributors include several residential projects in Guangzhou and Chengdu. During the year, about 2.3 million square feet of attributable GFA was completed, which were mainly residential. As at end of June 2018, around HKD 4.7 billion contracted sales are yet to be recognized. Contracted sales on the mainland amounted to CNY 3.6 billion or HKD 4.4 billion, mainly from the projects shown on this table.
In the coming nine months, we will be launching the remaining block of Grand Waterfront's phase 2A in Dongguan and the remaining block of TODTOWN phase one in Shanghai. Moving on to our rental business in mainland China. During the year, gross rental income grew substantially by 17.6% to nearly HKD 4.5 billion, representing 19% of the group's total gross rental income. In RMB terms, the gross rental income reached 3.7 billion with 11.4% year-on-year growth, reflecting positive rental reversions and additional contribution from new rental properties. In Shanghai, our completed landmark developments continue to perform well. At Shanghai IFC in Pudong, office space is virtually fully leased with strong growth in rental rates on renewals. Shanghai IFC Mall record healthy retail sales growth with notable rental reversions.
At Shanghai ICC in Puxi, office space recorded high occupancy and healthy rental reversions, whereas iapm mall achieved higher rents for new leases and renewals. As for ITC, our mega project in Shanghai, well-known multinationals, including a reputable co-working space provider, have already moved into the office tower of One ITC, which is the phase one of the project. The upscale mall at One ITC has received keen interest from luxury brands and popular restaurants and will be open in mid of next year. Phase two of ITC was also recently completed. Its office space is already fully leased. Leasing response of its retail space is also favorable. Construction of the remaining phases is progressing well, and we expect the entire project to be complete by late 2023. For Nanjing IFC, the superstructure work of the first office tower was completed.
The leasing response of this office and retail space have been positive. We expect the entire project to be completed in 2020. This concludes my update on the property business in mainland China. Now, moving on to the hotel business. Our hotel portfolio performance has improved following the increase in inbound tourist arrivals in Hong Kong. During the year, the portfolio achieved higher RevPAR. in October last year, we acquired a high-quality hotel site on West Kowloon waterfront with spectacular views of the harbor. In addition to this new hotel site, we are strengthening our hotel portfolio with a few new hotels to be opening in Hong Kong and mainland China over the next few years. In Hong Kong, Hotel VIC in North Point held its soft opening in July this year as part of the group's integrated development on the North Point waterfront.
The hotel will further elevate the status of the integrated developments as one of the most prestigious neighborhoods on Island East. Another premium hotel in Sha Tin, which is a sister project of Royal Park Hotel with over 600 rooms, will be open in mid-2019. In mainland China, construction of Four Seasons Hotel Suzhou is underway. It is located on the waterfront of Jinji Lake in Suzhou with over 190 rooms plus 11 lakeside villas. Next, let me share with you our views on the markets as well as our business prospects before concluding my presentation. Looking ahead, we expect the primary residential market in Hong Kong to be relatively active, supported by solid end-user demand despite headwinds such as rate hikes. Office rents in core areas will be supported by tight supply.
Demand is expected to be resilient, underpinned by the continued economic expansion and the Greater Bay Area development. Despite worry over RMB volatilities, we expect the retail leasing market is likely to do well due to favorable local consumption as well as positive inbound tourism due to increasing cross-border connectivity. In first-tier and key cities in mainland China, proactive policy responses should alleviate economic downside risk and enable stable economic growth, lending support to office leasing markets. On retail, the rising spending power of the millennials and middle-income class will continue to drive domestic consumption and support sales of well-managed shopping malls at prime locations. However, we expect the transaction volume and prices of the primary residential markets in first-tier cities will continue to be contained by measures.
Regarding the prospect of our property development business, with abundant sellable resources, we continue to sell residential units from both new launches and launched projects. Development margin is expected to be encouraging. We have sufficient land bank supporting our development needs for the next 5 to 6 years and continue to acquire lands with satisfactory expected return through various means. In terms of the prospects of our rental business, the existing property investment portfolio is expected to deliver satisfactory rental growth in the year ahead. We will continue to carry out AEIs to create values to the portfolio. Our new investment properties in the pipeline will drive rental growth further over the short to medium term. Last but not least, the group will continue to review opportunity for non-core property disposals.
Finally, I would like to conclude my presentation with this line highlighting the group's strong fundamentals. We endeavor to create values for our shareholders in the long run. Thank you very much for your attention. Please join me to welcome our senior management to come on board for Q&A session. Thank you.
May I now invite the first question, please.
Hello. It's Ken from Citi. I have three questions, two on Hong Kong and one on your buyback. First of all, regarding the sales strategy on the Hong Kong property sales, it seems that recently you have launched quite a lot of these completed but unsold one, like the Cullinan West, PARK YOHO Grand. Is it because of the impact of vacancy tax is quite strong, so you are rushing to sell? Or there's other reason? That is follow up with your, for example, your outlook on Hong Kong residential sector. This is the first question.
Secondly, you mentioned that the residential land base is around 90 million sq ft of the attributable side, but I see your completion schedule is still maintaining something like It's not ramping up in terms of the completion, especially on the Hong Kong side, so it's slightly below 3 million. Is there any way to push up the completion, or basically is management intention to keep 3 million or below 3 million sq ft on residential in Hong Kong a year? The last question is, I remember Chairman last year said regarding the buyback is one option. Should I ask this option is more highly likely to see after the result?
Actually, the vacancy rate in Hong Kong residential market is not high indeed, even lower for the inventory in the hands of developers. For our completed projects that we have sold recently, we have almost sold out the entire phase of PARK YOHO Milano and also, as you said, Cullinan West in Nam Cheong Station. For the coming project, also in PARK YOHO, Lepus, while we are selling part of it, we also put some units for lease as we need some time to absorb those units. The same situation also occurred in Victoria Harbour. We have almost sold out the entire Block 5, which is comprising mostly small units. For the next block, also Block 6, which is containing small units, we are putting this block to be leased as service apartment.
For sure, these units will be relaunched again at appropriate time later. So even if you are counting on OP granted, at the end of year, I think we only have a small number of units unsold or unoccupied. For the outlook of the public market, as below, the secondary market have slowed down recently amid the controlling measure and as most of the owners are now very reluctant to sell. I think the situation may continue as the huge transaction costs may deter any repurchase. But for the primary market, it is still following closely with the robust activities in last year. We are still seeing a very stable economy compared with outside world.
With ample liquidity and the prevailing low interest rate that provide a very reasonable affordability, you continue to induce more people, especially those renters, to buy. Basic demand is still very strong. I think total transaction in this year may consolidate a little bit compared with last year, as last year was a record year. But overall, I think the public market will continue to be healthy and stable.
On the completions schedule, I think probably you have noticed we have been completing about 3 million sq ft residential projects recently and in the couple of years following. You have actually pointed out that we have been fortunate last year and the year before, we have successfully acquired and converted some farming into residential project. But for instance, for Sai Sha, it will probably take five to six years to complete the infrastructure before we can deliver the first phase completion. So that although from the land bank perspective, we may have a bigger number, but if we try to convert into the delivery schedule, it will spread over a longer delivery or production cycle. Usually before, coupled with the government procedures and more stringent requirements or other regulatory requirements, the production cycle now is almost set five to seven years rather than previously four to five years.
So that we still want to maintain a very steady production, about 3 million roughly speaking on average.
Also add to that, there are some projects that were delayed by the West Rail.
Oh, yeah. More recently, I hope the delay will be minimal. I hope it is going to be 2 or 3 months, but it will inevitably drag on the production cycle. But on the third
I think for our group, since July, we have sold HKD 27 billion worth of properties. It is our intention to continue to sell because it seems to be the government wish that we should sell more properties. So we will just comply with their wish, yeah. On the buyback side, I think 2 points. I think we have increased our dividend already. Secondly, I think Adam has bought a lot of shares.
We both have.
His cost is higher than the current price. Anyway, paying the HKD 465 per share, it represents 4% dividend yield, so it is a good investment. As for the group, we are not considering buyback at this stage because I think there are plenty, we foresee there are plenty of buying opportunities on the land in Hong Kong and China. Especially now when the mainland Chinese developers tend to be much more cautious coming to Hong Kong to buy land, yeah. So we want to preserve more dry powder in case there are more opportunities. There are a lot of good sites coming up in the next 12 months, yeah. So we intend to try to get some good sites in the foreseeable, in the forthcoming 12 to 24 months. Thank you.
Thank you, Mr. Kwok. Next question, please. Gentleman in the second row, please.
Hi . This is Raymond Liu from HSBC. First, congratulations to the group results. I got four questions that I want to ask. The first one is about medium-term sales target. Just like Mr. Kwok mentioned, the company have already achieved like 27 billion contracted sales fiscal year to date. So what is your FY 2019 sales target in Hong Kong and China, respectively? The second is, should we consider this 40 billion as a minimum threshold for your annual contracted sales going forward? This is the first questions. The second question is about China property market. Our chairman mentioned that there is a lot of investment opportunities in China. Would you consider to invest more in residentials or more about the commercial projects? This is the second questions. The third question is about dividend.
Thanks for rewarding shareholders with a double-digit growth of dividends this year. Will you consider reward more with your long-term shareholders down the road? Because you highlight we aim at a sustainable dividend in the statement. Last question is about accounting rule, which is HKFRS. The company is about to adopt this accounting rules starting from next June. Do you expect any earnings impact or any reversal of bookings in the next 12 months time? Thank you very much.
Thank you.
Yes. As you know, we have a very robust sales in the past nine months. We have almost sold our PARK YOHO Milano and also Cullinan West. Recently, the small units in Victoria Harbour is also well-received. In the coming nine months, we have a lot of projects to be launched. Like phase 2 of Mount Regency in Tuen Mun and also our residential portion adjacent to the Ma Tau Wai Station, and also new phase of PARK YOHO Lepus, and not forgetting our commercial project in Shek Mun, Sha Tin. Apart from that, we also have some luxury units in Ultima 1 and 2, and also Bevington Hill, and also Victoria Harbour. Again, you can see that we shall be very active on launching our new projects in the coming nine months, and very confident that we can achieve our sales target of HKD 42.5 billion.
With ample marketing resources and also a high level of projects under development in medium-term in Hong Kong, we are very confident to achieve our average annual sales of HKD 40 billion. Having said that, although the past two years have been very robust on sales, we also need to take into account that for new projects, we may not have the sales consent on time, and even for completed projects, we always need some time to upgrade our site condition like the landscaping. We think setting our HKD 40 billion as our annual sales target to be really appropriate and reasonable.
Yeah. Charles?
Yes, right. We will have a- Yes, that is right. We have the new accounting policy in the coming year because of the new accounting standard. The policy is that the sales of property will be recognized when we transfer the legal title to the buyer, which is taken to be the time when the buyer takes control of the property. This is the requirement of the new accounting standard, which is quite different from the previous accounting standard, which are based on the transfer of the risk and rewards of the property to the buyer. We account for this change in accounting policy by doing what is called the cumulative capture method, which means that no adjustment will be made to the comparative figures of the previous year's P&L and balance sheet. They remain the same.
We also, as the standard allows, we will choose not to adjust the previous year sales, but have been reported and recognized in accordance with the previous accounting standard. They were all right. That means that we will not restate that sales figure, and we will not reverse that figure. There will be no double counting for that sales in the coming year. The overall impact is very minimal. Yes, right.
Anyway, in short, there won't be any double counting of profits. Yeah.
Okay.
For China, as you all know, the residential sales market is extremely competitive, where it is just hard to get any cheap land bank for residential. There is also on top, it seems like every three months, there is newer restrictions and new policy announcement limiting your purchase quota, limiting your mortgage rate, limiting your mortgage LTV, limiting foreign people buying, and lately limiting the price that you can sell at or not allowing you to pre-sell at the price you want. I think with that, we are, in general, more favored towards mixed-use integrated properties in the first and second-tier cities, including a recent plot we bought in Nansha in Guangzhou, on top of the high-speed train station and intersection of a few railway lines. Given that Eric has sold very well one of our projects in Shanghai, I will let him add to it.
That is coming harder and more rare these days.
Actually, that project is also an integrated project, but with a residential component. We have launched 242 units, residential unit as phase one, and the units were sold out within four hours. Actually, it is really depending on the location and the quality of the building. Also, the transportation as well, because it is in Minhang District, the project is on top of the terminal station of Line 1, so the transportation is really good. Also, we have, in the future, a big shopping center together with a hotel and office development on there. So it was well-received by the market.
On the dividend part, I think when we grow our earnings per share, we will be paying more dividend. I think at the dividend of HKD 4.65 per share, I think we will try our best to try to maintain the dividend even though there may be profit volatility. But if there is a rise in earnings per share, we will increase the dividend per share. Thank you.
Thank you, Mr. Kwok. Other questions? Gentleman in the middle, please.
Hi, this is Nick from Macquarie. I have three questions. My first question is on the unbooked contract of sales. I understand the figure is HKD 29 billion unbooked as of last year. I was wondering if management can give us a possible breakdown of the top three to five projects, and among those, how many of them are completed projects? My second question is on the percentage of Hong Kong residential contract of sales for the past six months. What is the approximate percentage of home buyers using developer financing? My last question is on, I guess, management touched base on it just now on keeping more cash to take advantage of land banking opportunities, but the general outlook on the land cost going forward and land banking strategy in both Hong Kong and China.
I think on the home buyers financing, our outstanding is about HKD 6 billion. Yeah. HKD 6 billion.
Yes.
Yeah.
That only comprise only around 1% of our total asset.
Hi. I'm Karl Choi from Merrill Lynch. I have three questions. First, just want to go back to the chairman's comments on land acquisition opportunity. We know that the Express Rail Link site should be coming up in the next six months or so. Given the size of the site, would Sun Hung Kai be likely to look at the site on its own or do it through a joint venture? Is there any maximum gearing that you're comfortable to leverage up the group in order to acquire the site? Second question is, can you give a little bit more color on the pre-leasing progress for phase 1 and 2 of ITC for the retail portion? What you are seeing so far in terms of rent level or yield and cost. Then third is on the farmland conversion site.
Do you expect any sizable farmland to be converted in the next fiscal year, based on the current sort of negotiations pace? Thanks.
Okay. I answer the first question first. In fact, we have been actively pursuing to get planning permissions to convert our agricultural land bank into residential and other kind of properties. Actually, there are two actually nearing very close to the final stage of completion for the current financial year, and will be announced the details when the process is completed. Actually, as I reiterated, we have been aggressively or diligently preparing ourselves to turn our agricultural land bank, firstly, to get into a position procuring the planning consent and then converting into relevant uses and go through the land premium process. Probably you may appreciate will take a very long period of time to complete the whole process. We will announce when the details is available.
First one about the high-speed rail in West Kowloon. The government haven't issued any terms and conditions yet. We understand that actually they will invite tender by the end of this year. So after we sort of study the terms and conditions, we decide what to do. The second question is on ITC Shanghai. We have completed the phase 1 and phase 2 of the total development. For phase 1, the office space is actually 80% leased already. The tenant actually has moved in and have been working there for almost like a year already. For the shopping mall, I think the pre-leasing is doing very well, and we are going to open the shopping mall by the second, around middle of next year. For Two ITC, which is mainly office, actually the building is fully leased.
Actually, for phase 3 and phase 4, which is actually the bigger portion of the development, we are going to complete the basement and the piling by the end of this year, and we will start the superstructure next year.
Thank you, Mr. Tung.
On the farmland conversion, I think, we share with the common concern that Hong Kong needs more housing and more offices. So we are speeding up all our applications to try to convert our land to office or commercial or residential.
Residential.
Yeah.
I would add especially up zoning some of the new territory ones, which seems to be somewhat of a consensus. Because right now they are at 0.4 times plot ratio or below, which is a massive waste of resources.
Well, perhaps I may add, you may appreciate from the media that we are currently undergoing to up zone the recent completed conversion case in Sai Sha, that we are asking for a 20% increase in GFA, and the submission is being under processing and will go to the planning board very soon actually.
Thank you, Mr. Wong. For the interest of time, may I invite the last question, please? Gentleman at the back, please.
Thanks. Justin Kwok of Goldman. Perhaps two questions, one in Hong Kong and one on the broader strategy. On Hong Kong side, I am more interested on the retail portfolio. Can you add a bit more color on the rental reversion or the tenant sales growth in the past year? And whether you are seeing any signs of slowdown due to the potential volatility in currency or the macro at the moment? The other question more on the overall strategy, we look at your peer group, there are more and more companies looking at projects or opportunities outside of Hong Kong, including like Australia, Singapore or U.K., be it property or non-property. Is this something that you would also pursue or looking at at the moment?
If that is the case, would there be any threshold or would you just want to try it out or you expect to do a bit more on that? Thanks.
On retail.
Yeah, I think on the Hong Kong retail side, we haven't seen any negative impact on our group's shopping malls so far. I think for the first six months of this year, we've continued to see strong double-digit growth on both rental reversion and retail sales growth. There's some lingering negative feelings about the RMB depreciation and the U.S. and China trade war. But I think we also tend to see that there are opportunities from kind of the connectivity from the high-speed rail and also the Hong Kong-Zhuhai-Macau Bridge. They'll be linked by the end of this year. And we foresee that will bring more tourists from the Greater Bay Area into Hong Kong and also more shoppers from the Shenzhen district. So we feel that will kind of balance some of the uncertainty in the market right now.
So we are cautiously optimistic for the rest of the year for the retail market in Hong Kong.
On the overall strategy, our strategy is to focus on Hong Kong primarily and then the mainland. We are experimenting in the London market. We have a small joint venture project with a good local partner. I think our success in Singapore on the ION Orchard has encouraged us to experiment new market and as long as we can find a very good local partner. So if we diversify outside of Hong Kong and the mainland, we're going to experiment Singapore and the London market. Thank you.
Thank you, Mr. Kwok. This is the last question, and the briefing is coming to close. Ladies and gentlemen, thank you for coming. Hope you enjoyed the presentation and find it useful. There are some refreshments outside. Please stay and enjoy. Thank you very much and see you next time.