Friends from the investment sector, good afternoon. Welcome to New World Development's FY 2022 Annual Results Presentation Online Analyst Presentation. I am from the Investors and Stakeholders Relations Department, Christy, the moderator for today. Let me introduce to you our management. New World Development Executive Vice President and CEO, Dr. Adrian Cheng. New World Development CFO, Mr. Edward Lau. If you have any questions, you may submit your questions in the webcast chat box.
We will spend some time to answer some of the questions. We will now invite Mr. Edward Lau to go through the group's FY 2022 annual results. Thank you. Thank you, Christy. Since the outbreak of COVID-19 in 2022 now, global macro economy was under serious challenge. The pandemic has not subsided yet. Social distancing restrictions are still there, so this is a challenge to many enterprises. However, for our group, under such, very
Under such big storm, we are still able to ride out the difficulties and achieved stable performance. In the past two fiscal years, our revenue was stable. For two consecutive years, our profit achieved positive growth. Very few developers could do that. In FY 2022, our profit attributable to shareholders was up 8%. We continued to strictly control costs.
Administrative expenses came down 5% year-on-year. As of the end of June 2022, available capital resources amounted to HKD 105 billion. Net gearing ratio continued to be at low 40% level, so the same as the guidance given to the market earlier on. In face of continuing risk regarding FY 2023, we will be relatively conservative. We expect that underlying profits will be flat, or there may be a slight decline. In FY 2022, our financial performance was very stable.
Regarding development of properties, at the very early stage, we started to invest in Greater Bay Area, so we acquired land at a cheap price. We're able to have high profit margin. Overall gross margin increased from 41% - 52%. This year, 85% of contracted sales was from GBA and Tier 1 cities of Yangtze River Delta.
For investment properties, this year, we continue to achieve very outstanding performance, so we are among very few developers which could achieve positive growth. For K11, in particular, segment results was up 17% year-on-year. Since FY 2015, we progressively have increased dividend payout to pay back to investors for their support. As we said in our guidance earlier, for this FY, our dividend will be at HKD 2.06 per share. For the whole year, dividend yield will reach 9.4%.
Looking into FY 2023, we have four main themes in our business. First of all, arrival quarantine policies are being relaxed. This Monday, the government changed from 3+4 to 0+3. It is expected that quarantine measures will be relaxed very soon. Sooner or later, the border with the mainland will be reopened. Our investment properties and our hotels will benefit.
In FY 2023, there will be an additional HKD 150 million sales to our shopping mall. In October last year, the government announced the development strategy of Northern Metropolis. Since then, farmland conversion has been faster. In Northern Metropolis, we have 12 million sq ft of GFA or farmland, which we are actively deliberating with the government. Number three, in mainland China, we will continue a stable contracted sales.
We work with the SOEs, and we very carefully select projects at good locations. Some time ago, we collaborated with China Merchants to invest in Shenzhen Prince Bay and Shanghai Putuo projects. With Guangzhou Metro, we worked together in the Guangzhou Hanxi Project. Number four, we will actively examine how to improve organizational structure to maximize shareholders' return. For example, we will continue to dispose of non-core assets and preserve cash. We will consider corporate actions to release value.
Regarding property development, overall revenue has decreased. However, segment result is still stable. In mainland China, property development segment result was up 11% year-on-year. This is mainly because of more bookings of Greater Bay Area projects, accounting for 70% of total segment results. Gross profit margin was as high as 70%.
We started to invest in GBA at an early stage, so that's why we enjoyed very low land price. We'll continue to be skewed towards Tier One cities in China, especially in GBA and Yangtze River Delta. In Hong Kong this year, project booked is mainly 888 Lai Chi Kok Road commercial building. In Hong Kong and mainland China, we have very good portfolio of property developments, so we can very flexibly select those projects with the best return.
In the coming two fiscal years, we will continue the balanced development and even development between the two places. In FY 2023, there will be a contribution of HKD 30 billion contracted sales. In FY 2024, there will be contribution of HKD 30-40 billion contracted sales. In Mainland China this year, the economy was affected by macro factors.
Our contracted sales were still at RMB 17.1 billion, more or less the same as our estimates. We will continue to focus on tier one cities in GBA and Yangtze River Delta, especially Hangzhou, Shanghai, Guangzhou, Shenzhen, where there is rigid housing demand. Last year in these regions, our contracted sales accounted for 85% of the total.
Let me give an example. On the right, you can see the Wangjiang Xincheng project in Hangzhou. On the first day of presale, there was oversubscription of 10 x. The subscription sales was RMB 7 billion. This broke the record of high-end residential subscription in Hangzhou. All the capital has been recovered and can be invested into other projects. In the future, we will use different channels to replenish our land bank.
We have created strategic cooperation arrangement with many SOEs, so we can make good use of their resources and connections in China. For example, we work with China Merchants in Shanghai Putuo project, with total saleable resources of RMB 14 billion and presale can take place in FY 2024. Besides, we have a quick win strategy.
Some time ago in Shenzhen and Guangzhou, we acquired three projects at very attractive price. This will accelerate our sales and cash recovery. In Hong Kong, last year in October, in the policy address, the concept of Northern Metropolis was introduced. After that, the government put in place many new measures. Number one, acceleration of farmland conversion. On the left, you can see standard rates land premium for farmland exchange. In March, the government announced this mechanism.
In Fanling and also Ma Shi Po, our farmland benefited. The premium was around HKD 5,000 per sq ft. Comparing with the tender price of HKD 7,000-8,000 per sq ft, the premium is much lower. An increase of 20% in plot ratio. On last Friday, the Town Planning Board approved the Kwu Tung North and Fanling North residential plot ratio increase. For residential property, there will be an increase by 20%. Our project GFA will go up around 110,000 sq ft. Assuming HKD 3,000 per sq ft of profit, then we can already have an additional HKD 300 million profit. Now the process is being expedited.
In the past, rezoning applications will take a few years and now the pace is much faster. In the past year, we already submitted six rezoning applications involving 6 million sq ft of GFA. There are also two land exchange applications involving 800,000 sq ft of GFA. These are in active processing. The government has the intention to introduce technology and research industries into the Northern Metropolis in San Tin and Lok Ma Chau Loop area to attract more mainland experts. In this way, in the short run, the short-term leasing markets can be supported and the overall sentiment in the property market can be improved. In the long run, housing demands can also be boosted. We expect that in mid-October, the government will announce more favorable policies during Policy Address.
Now we have around 15 million sq ft of farmland in Northern Metropolis, and 12 million sq ft of GFA is in active deliberation with the government authorities. Here, if you refer to the wide-circled parts, these are areas where we have projects. The scale is three times that of the existing Hong Kong Development Properties Land Bank. In July, the government announced the setting up of the Land and Housing Supply Coordination Group to expedite further farmland conversion. Here you can see the government's infrastructure development blueprint. There is the Northern Link connecting the Northern Metropolis and then in San Tin, Lok Ma Chau, Hong Kong, Shenzhen, technology park will be built in order to attract industries and increase employment opportunities to attract more talents. In this way, there will be bigger housing demand.
In the coming three years, there will be six to seven farmland, where land exchange will be completed and will be injected into the land bank. In the past one year, we have already submitted to Town Planning Board six rezoning applications. In the future, our land reserve, our land bank will focus on conversion of farmland to lower overall land price or cost.
Regarding The Pavilia Farm latest progress, the progress of phases one and two was satisfactory. Completion is on track and booking will be in FY 2023. For phase three demolition work, it is almost completed. The authorized person has done assessment of the project, and it is confirmed that the latest estimated material date for phase three will be 31st March 2025. For investment properties, in the past few years, we achieved very good growth.
For revenue, three-year CAGR was 10%. Thanks to improvements of operating efficiency, segment results recorded almost 20% growth. Gross profit margin continued to rise. Recently, the government has been doing a good job in arrival quarantine policy, and on Monday, they changed 3+4 - 0++3. If there is further relaxation, then in FY 2023, there will be an additional HKD 150 million sales in shopping mall. I think in whole Hong Kong, we have more than 10 retail hotspots and seven hotels, and we're going to be the biggest beneficiary of border reopening, especially 11 SKIES. There's almost 3.8 million sq ft. They will be opened in phases. 11 SKIES is just adjacent to the airport, and it will benefit a lot from the recovery of the tourism industry.
With relaxation in the immigration and arrival policy, we believe K11 projects will perform even better. You can see that in the past few years, even though there was big impact from COVID-19, K11 still performed very well because of four main strengths. First, K11's brand value. Number two, our very unique ecosystem with more than 21 million members.
From our other businesses, customer traffic can be diverted to our shopping mall for consumption. They can use our K Dollar and also KLUB 11. We have strong CRM system. By means of precise marketing, we are able to interact with customers to stimulate their spending. Member spending now accounted for more than half of our total consumption or spending. Finally, we have mature operation team. They realize operational excellence, including the enhancement of our brand mix.
Recently, in Guangzhou K11, they conducted brand upgrading. They have brought in a number of tier one international brands. This is a testimony of tenants' recognition of our operational capability. By all these strengths, we're able to grab more market share. Now, if you look at financials, you can see the strength of K11. In Hong Kong, segment results was up 14%. For Victoria Dockside and K11 ATELIER King's Road, they're up 19% and 35% respectively. If there is across-the-board border reopening in Hong Kong, we believe that we can benefit from even more significant growth. In Mainland China, K11 projects achieved significant growth, so this can offset the impact of COVID-19 in K11 Shanghai because of lockdown. Overall segment results were still up 29% year-on-year. This year is our 11 SKIES milestone.
In July, there was opening in phases. The Hong Kong government attaches much importance to the tourism sector, and recently, the Culture, Sports and Tourism Bureau was established to promote tourism development. 11 SKIES will play an important role to help the tourism sector to take off in Hong Kong. 11 SKIES is the biggest, newest and most popular tourism landmark. The retail portion will be opened in 2024. At that time, we believe that there will be overall reopening of border, and the tourism industry will become very resilient. At that time, our retail leasing will be expedited. For example, in Korea, there is the very popular digital arts gallery, arts museum. They will set up a permanent gallery in 11 SKIES with an area of 28,000 sq ft. So right now, occupancy rate of K11 ATELIER is satisfactory.
Our goal is to reach 65% occupancy rate by the end of the year. 11 SKIES is at the intersection points of the airport and Hong Kong-Zhuhai-Macao Bridge, covering a 1.5-hour living circle of the GBA and 46 million tourists. In this way, we can seize endless tourism opportunities. Right now, in Hong Kong and China, we operate 17 K11 projects altogether. In the coming four years, there will be 21 more, altogether 38, reaching 2.8 million sq m. In Hong Kong and Mainland China, 11 K11 projects, rental income from 2022 FY to FY 2026 will show a 30% CAGR. This year for the macro economy, it was affected by many negative factors. Let's talk about interest rate risk. The US Federal Reserve in June accelerated interest rate hike.
Right now, they have increased it to 3%-3.25%, and it is expected by the market that next year in March, it will reach 4.75%-5%. Internally, we have done stress tests. For every 1% increase in interest rate, that means there will be an additional HKD 600 million interest expenses. We expect that in FY 2023, our average financing cost will be at around 4.5%, equivalent to an additional HKD 1.2 billion of interest expenses. In order to reduce interest rate risk, we have in advance entered into many interest rate hedging contracts in the coming 12-18 months. Our fixed rate portion will be at mid- to high-40% level. Interest expenses will increase.
However, for FY 2023, we will have more than HKD 8 billion property development profit to be booked. Together with our recurrent revenue increase, we are confident that it will be enough to offset the increase in interest expenses. In terms of exchange rate risk, all along we regularly buy forward FX hedging contract to lock in RMB FX rate. At regular intervals, we do stress tests to assess the impact of RMB exchange rate on us. Our strategy is to continue to hedge more than half of our RMB profit in the coming 12 months and every quarter, we will conduct that or implement that with discipline. Many official media emphasized that it is important to maintain the stability in exchange rate. We believe that there will be a lot of measures to reduce the pressure on depreciation.
A few days ago, we saw 7.25, and after that, in one single day, there was a rise back to 7.15. We believe that exchange rate will be at around 7.2. According to major institutions' projection, RMB exchange rate in 2023 will rise back to below seven, so we don't need to worry too much about depreciation pressure on us. In the future, we'll continue to face macroeconomic risk, including interest hike and inflation, so we will actively manage our net gearing ratio. First, we'll continue to sell non-core assets to preserve capital. In FY 2021 and 2022, the group exceeded this target of selling non-core assets. This year, we sold HKD 13.9 billion. Criteria of sale of assets include the following. First, assets at low IRR. Number two, minority stake projects.
Number three, projects with lit synergy to our ecosystem. We expect that in FY 2023, we will sell HKD 10 billion of non-core assets, and we will expedite contracted sales. Last night, we announced the sale of Cheung Sha Wan Wing Hong Street Commercial Building project, 50% stake to a Singapore fund, and we recovered HKD 3 billion. For FY 2024, we will sell non-core assets, and the target will go up to HKD 15 billion. Regarding CapEx, in FY 2021 or starting FY 2021, we have successfully controlled CapEx to below our budget. This year, our expense is HKD 7 billion less than budget. In FY 2023, we successfully came down from the original HKD 50 billion Hong Kong dollar budget to HKD 36 billion. We will continue to very prudently evaluate our land purchase and other CapEx.
CapEx project in the coming three to six months. In FY 2024, we expect that CapEx will even be lower than FY 2023. How are we able to successfully control CapEx? First, in terms of replenishing land bank, we will be even more prudent and cautious. Number two, we will work actively with strategic partners. Just now we said, we announced the Wing Hong Street sale.
That is an example. Number three, we will finalize the design direction as soon as possible so that we are able to reduce the need of alteration and to reduce wastage in time and materials. Number four, we will use building materials with the highest cost effectiveness. Number five, through collective procurement, we are able to get the best price. Number six, we will reduce the alteration in design in the construction process. We expect that in the next FY, our net gearing ratio will be at mid- to high-40% level, so the risk is controllable.
Apart from development business, we actively pay back to society. In December last year, we announced the first non-profit making private subsidized housing project in Hong Kong, and we sell quality housing projects at cost. Now, the progress of this program is very good. Next month, we will go to Town Planning Board for vetting. If everything goes smoothly, in 2025, we will start to pre-sell uncompleted flats, and completion will be in 2027.
When the fifth wave of COVID-19 was very severe, we're the first property developer to take the lead of pandemic control work, and we introduced 10 measures. For example, we gave out RAT packs and heaters. We introduced the first large scale donation matching platform, Share for Good. So far, 60 NGOs have participated, and we have raised more than HKD 50 million worth of donations and also materials. In the past few years, we have done a lot in ESG. For example, we are the third company in Asia to get from SBTi an approval of our 1.5 degree science-based reduction short-term target. We promise that we will go according to the net zero standard of SBTi.
Besides, we introduced the first Creating Shared Value lease. More than 60% of lease area of K11 ATELIER Victoria Dockside has joined our program. We are the first enterprise issuing a USD-denominated social responsibility and green dual tranche bond. We have won more than 40 sustainable development awards and accolades, including the Pioneer Award top-level Green Building Leadership category developer.
We will continue to enhance our performance in international ESG rating. Diversity and inclusion is a priority area at NWD. With the recent board news announced last week, we will achieve 35.3% female board by December first, the effective date, which would make our board the most gender diverse among Hong Kong real estate developers. We are committed to building a people-oriented culture and prioritizing the well-being of our talents.
We are piloting a 4.5-day work week and one work from home day a week this summer, with an aim to improve the work-life balance and work experience of our employees. We strongly believe that these initiatives will help motivate our talents and boost business efficiency and overall productivity. Thank you. Thank you, Edward. It is now Q&A session. So through the webcast platform, you can submit your questions in writing. I will relay your questions to the management for them to answer. Thank you. Here's the first question. Interest hike. What would be the impact of interest hike on the property market? Many people talked about reducing macro control measures. What do you think? And what will be the outlook of the housing market or property market this year? I'm Adrian. Now, we are subject to the interest rate hike influence.
In the short run, the property market has actually softened. We believe that very soon, there'll be time to digest the interest hike news. I think the impact on the property market will be a short-term one. HKMA has reduced the requirement on stress test. For rigid demand and for self-occupation demand, this will be helpful. In the future, we hope there will be new measures. It is good to reduce the very strict macro control measures. The government has relaxed quarantine measures to zero plus three. I do think that the government will gradually enable society to regain its strength, and there will be a good direction for the property market to recover. Right now, the market is supported by rigid demand.
Recently, I asked my hotels. I have so many hotels and for all of them, their wedding banquets are already fully booked for the whole year. What does this mean? This means many people will need to buy properties for the first time, especially the young people. Based on my past experience, when young people buy properties, well, sometimes the parents will pay the down payments, and then the young people themselves will pay mortgage. In Hong Kong, I think the wealth foundation is rather sound. In the future, there is still a lot of so-called new blood and support in terms of rigid demand. Right now, for like one to two months, two to four months, for a short period of time, many people adopt a wait and see approach.
However, this is going to be short-lived because after one to two months, you can see the pace of interest hike, and I think there will be better visibility. Hong Kong, after Hong Kong announced the zero plus three policy, many Hong Kong people rushed to travel abroad. The border with the mainland is still not fully reopened. Within the short term, I think it won't be favorable to local consumption. What will be the impact on K11 Hong Kong's business? There are signs outside that there should be overall cancellation of the quarantine arrangement. What do you think? In the past few years, the Hong Kong economy was under the COVID-19 impact. We're happy that the government has changed quarantine measure into zero plus three. This is the first step towards normal.
There is a relaxation to 12 people per table and maximum capacity of 240 people. Now, the government is assessing the risk of COVID-19. We hope that pandemic control measures can be relaxed, more large scale events can be organized so that more tourists and businessmen can be attracted to come. In the past two years, there was negative growth to many of our peers in the industry, and we have been working hard. In Hong Kong and China, sales has increased quite significantly. In K11 Hong Kong, up 8%. In China K11, up 15% year-on-year. We actually outperformed the market under the pandemic. Now we are under interest rates hike cycle. Interest expenses are going up, net gearing ratio is going up in the coming few years.
Is the group able to maintain the progressive dividend payout policy? Right. In controlling debts and liabilities, we can see that under the macro environment, we control our CapEx, we continue to sell non-core assets to recover capital. We will control our CapEx. You can see that in our budget in FY 2022, compared with budget, we spent around HKD 7 billion. In FY 2023, we believe to reduce it to HKD 14 billion, so down to HKD 36 billion instead of HKD 50 billion. We have been doing a good job in this management. For sale of non-core assets in 2022, we achieved HKD 13.9 billion. This year in 2023 FY, we hope to achieve HKD 10 billion.
You can see, we have just announced that we are going to sell Wing Hong Street equity to Singapore Fund, and we have recovered HKD 3 billion. Our progress has been very good in terms of dividend. It will be sustainable and progressive dividend policy as this time our dividend is HKD 2.06 per share for the whole year dividend. Over the years, we followed our profit and our cash flow in progressively as and sustainably paying out dividend.
Our net gearing this year is 43.2%. We will maintain a 43.2%-45% level. I think this is really controllable. I think you can rest assured. For RMB, well, it has been falling fast. However, I think we have seen some return to stability. Actually the RMB exchange rate has risen. After some time, I think it will be down to below seven, like 6.8 or 6.9. So I think RMB is stabilizing. You don't need to worry too much. For The Pavilia Farm phase three, what is the progress of redevelopment? When will you resell the canceled units? For The Pavilia Farm phases one and two, progress has been satisfactory. Completion will be in schedule, and booking will be in 2023. We have already sent letters to the buyers.
The critical material dates will be 31 March 2025. For the canceled units, there are 250, roughly. The impact is around HKD 3.8 billion. We will focus on construction progress and also the project property delivery. For resale, at appropriate time, we will discuss with MTR Corporation. Since last year policy address, when the Northern Metropolis concept was introduced by the government, in the past year, different policies were introduced about farmland conversion. In the past year, is there any new development that you can share with us? In the presentation, I said already that in terms of rezoning and conversion of farmland, the government's process has been faster than before. In the past year, we have been submitting applications very diligently. We have already submitted six, covering 5 million sq ft of GFA.
Now we have 15 million sq ft of GFA or farmland in the Northern Metropolis area, and we are actively examining 12 million sq ft GFA out of it in Yuen Long, Fanling North, Hung Shui Kiu farmland area. After completion, it will be three times of the development property land reserve of Hong Kong. In the coming three years, there will be six plots of farmland that can go into land reserve. For mid to long term, there will be nine million sq ft of GFA available. In Hong Kong and Mainland China, for sold but unbooked sale, how much is it? As of thirtieth of June 2022, sold but unbooked revenue, HKD 29.1 billion. HKD 25 billion and HKD 4.2 billion will be booked in FY 2023 and 2024.
In Mainland China, sold but unbooked, RMB 8.7 billion. RMB 7.61 billion will be booked in FY 2023. RMB 1.05 billion will be booked in FY 2024. The group just announced cooperation with SSG to develop the Wing Hong Street project. Why such a decision? For West Kowloon, all along it has been a priority commercial district. A few years ago, we started the strategic layout. There are three projects. The first project is 888 Lai Chi Kok Road. We already have sold out more than 80%. We have brought in Nanyang Commercial Bank as our anchor tenant. For Wing Hong Street, we have brought in a Singapore fund as our strategic partner. We have recovered HKD 3 billion of capital.
With cooperation with a strong player, we hope to build this Cheung Sha Wan new landmark. Because of time constraints, now we are taking the last question. Some time ago, there are reports saying that the group is now selling D‧PARK. How many projects are involved, and what is the valuation? What is the latest progress of that? Concerning market rumor, we will not respond specifically. In previous results presentation and other investors meeting, our strategy all along is that at appropriate time, we will dispose our non-core assets to optimize our investment portfolio. Resources can be placed in high return business and projects with high development potential. In FY 2023, we plan to sell HKD 10 billion of non-core assets. In FY 2024, HKD 15 billion. Okay.
Thank you very much for joining New World Development's FY 2022 annual results presentation analyst briefing. If you have any questions, please feel free to contact Investor Relations Department of New World Development. Goodbye.