Everyone again. So, we will have George to start with the results and key highlights, and then Greg will then share the operational update of our Hong Kong and the overseas portfolio. KS will talk about our operational update on Mainland China and our capital management strategy, and then John will follow to share some updates on our strategies. Lastly, George will share our views on the outlook of the market and Link in particular. Now, without further ado, let me hand over the floor to George.
Thank you, Christie, and thank you everyone for joining us. Pleased to have KS, Greg, and John with me here today. During the year, the portfolio fine-tuning continues, even against adverse market conditions. Our achievements in Link REIT portfolio, SMN Enhancement, capital management, were by no means an easy feat in this market context that we're working in. In general, the high occupancy rates in retail were underpinned by very strong leasing demand, tenant remixing, and the ability to attract new tenants to our newly renovated spaces. Comparing same-store tenant sales growth indices, the Link portfolio was 101.3 compared to 2018-19, an outperformance against the broader Hong Kong market, which was 85.3 for the same period. Meanwhile, in Mainland China, retail rental reversion returned to positive 2.8%.
Additionally, the benefits of diversification were apparent, where the uplift in Singapore and Sydney, Australia was countercyclical to Hong Kong and Mainland China. Leaving no stone unturned, though, there is always room for improvement. For instance, our steadfast commitment to operational excellence was demonstrated, with the upgrade of our car park management system, which is in the process of being migrated to a cloud-based AI platform to sharpen the car park portfolio performance. AEI enhancement in Hong Kong and Mainland China also yield positive results, achieving double-digit ROI. For example, a key project we completed in Link Plaza Tianhe in Guangzhou achieved a ROI of 12%. Under capital management, our strong financial position was an advantage to weather volatile financial conditions over the past year, particularly as interest rates were in an upcycle.
Looking ahead, our refinancing requirements over the next two years are manageable, with not more than 20% of the total debt maturing in a single year. As we move on to the annual results, I'm pleased to share a snapshot of our financial performance with you. Despite the slower-than-expected retail consumption recovery in Hong Kong and China, our diversification strategy has enabled us to produce a solid set of results. Revenue and NPI grew by 11.0% year-on-year and 9.5% year-on-year, respectively, mainly due to the contribution from the Singapore assets acquired last year, as well as a full-year revenue effect of the last year's acquisition in Australia and Mainland China. Total distribution amount grew 6.4% year-on-year to HKD 6.7 billion, while DPU for the year declined 4.3% year-on-year to HKD 2.63 due to rights issue dilution.
Amidst the tight financial conditions, our balance sheet exhibits financial strength underpinned by a healthy net gearing ratio of 19.5%. Net asset value per unit amounted to HKD 70.02. Taking a closer look at the first and second half performance separately, we were able to at least maintain, if not grow, on most major metrics shown here. Using our Hong Kong portfolio as an example, occupancy levels were sustained at almost fully let levels and maintained at 98% since September 2023, even amidst the concern of consumption slowing down and the leakage to Shenzhen. With the decent operating performance, our revenue experienced robust growth in both the first and second half and registered a year-on-year increase of 11.3% and 10.7%, respectively, thanks to the contributions from new acquisitions and support by our tenants.
While a slight moderation in net property income was observed from the first half, it maintained a positive trajectory, accumulating in 10.4% and 8.6% year-on-year growth in the first and the second half of the year. Despite slower-than-expected growth in most of our operating markets, DPU in the second half increased 1.9% as compared to the first half. Now, let me pass on to Greg, to share more of the operational update.
Thank you, George, and good afternoon, everyone. I'll start with the performance for Hong Kong retail, where our occupancy rate sustained at an all-time high level of 98%, which highlights the resilient demand of our retail portfolio and the important role our assets hold in the daily life of Hong Kong. Rental reversion in this segment has seen a healthy expansion with an increase of 7.9%. In line with these achievements, the average unit rent reached HKD 64.40 per sq ft, and notably as the highest level since COVID time. With tenant sales performance, this has shown a moderate increase of 0.4% over the reporting period. Analyzing our trade mix, with our largest trade category of F&B, this has remained at the forefront with a steady growth of 4.6%, while supermarkets and foodstuff categories continued to lag and general retail expanded by 1.3%.
Altogether, these factors contributed to the continued stability of our occupancy costs across the portfolio at a sustainable level of 12.6%. Now, moving on, I'd like to focus on the trend of cross-border consumption. The growing appeal of Shenzhen to Hong Kong shoppers for entertainment and dining experiences has been evident. This shift has dampened Hong Kong's overall retail sales performance in the latter half of the reporting period. Although this trend has yet to significantly affect our portfolio, the market is expected to see equilibrium in the current months. It's essential, then, that we continue to respond to these developments. We remain open to recycling of assets and optimizing our portfolio as suitable opportunities arise. Despite a modest year-on-year increase for tenant sales, most notably, our tenant sales growth, when compared to financial year 2018-2019 levels, achieved 101.3%, outperforming the broader market, which has only reached 85.3%.
Now, looking at retail leasing. We achieved really good outcomes over the financial year 2023-2024, with over 660 new leases successfully signed. In this, we've introduced 270 new brands. This has played a crucial role in our efforts to maintain the relevance of our portfolio. Coupled with this, we've seen 115 of our existing tenants expand their presence. This demonstrates their confidence in the growth potential within our portfolio, as they've seen opportunities to continue to scale their business with us. The top five trades listed here have been carefully selected to reflect current consumption trends. Now, moving on to Hong Kong car parks, where the structural shortage of car parking spaces in Hong Kong underpins our steady income growth in this segment, positioning it as a constant driver of revenue.
In financial year 2023-2024, we saw a 3.4% increase in revenue from our car parks and related businesses, year-on-year. Despite a decline in parking ticket sales, this was compensated by higher parking rates and an increase in the total parking hours. We are dedicated to keeping a close watch on market trends and formulating strategic plans to maintain our performance. This includes the ongoing implementation of our new car park management system, which George has just alluded to. I will touch on in more detail on the next slide. Our commitment to upholding operational excellence is demonstrated through the Management by Data initiative and ongoing technological upgrades. Through this, we aim to increase productivity and efficiency to provide tenants and shoppers with high-quality experiences. The revamped car park system, which provides better analytics and integration also with our Link Up app, is one such example.
The system is currently being rolled out and implemented over 121 sites throughout Hong Kong. Completion is expected at the end of June. The ease of car park payments via several e-platforms, including Link Up, as well as the digitized customer service, improved the customer experience and drive footfall to our car parks and our malls. In the longer term, we're looking at the possibility of a dynamic pricing model to enhance revenue. We'll look to try this over the next 12 months. In terms of asset enhancements, our continued efforts to maximize the potential of the portfolio are evident. Over the past year, we completed four asset enhancement projects in Hong Kong, investing some HKD 230 million. These projects have yielded pleasing outcomes to enhance our tenant mix and customer offerings. Importantly, the return on investment for these initiatives has ranged in the low to mid-teens.
Currently, we have a further 3 projects in motion in Hong Kong, with a combined CapEx of HKD 151 million. Additionally, we've earmarked around HKD 640 million for upcoming projects that are in various stages of planning and some awaiting statutory approvals. And we'll just leave Hong Kong for a moment and move across to Singapore, where I'm pleased to say that the portfolio we acquired a little over 12 months ago is now fully integrated, as is the team there in Singapore. And we're achieving good traction, which is evidenced by rental reversions nearing 10%. The strong rebound in shopper traffic has driven tenant performances, particularly in the categories of food and beverage and wellness and beauty. We've maintained high occupancy rates. But a slight dip to 97.8% is very temporary and attributed to tenant remixing and space optimization at Jurong Point.
This is expected to result in near-term improved rental incomes. Onto Australia, where retail activity continues to grow. Sales of our Australian retail assets have now returned to pre-COVID levels, despite footfall still being on its pathway to recovery. Our food and beverage tenants there are doing well. This follows the introduction of significant numbers of new and unique offerings. Portfolio occupancy has edged up further to near full occupancy at 99.7%, underpinning the stability of our rent there and demonstrates the strong market positioning of our properties in the Sydney CBD. International office. Although the broader challenges in the office sector remain, the flight to quality thematic is evident and is a mitigating factor for our portfolio of office assets. The core precinct in Sydney, where the majority of our assets are located, recorded a net positive absorption in 2023.
We've seen a dip in portfolio occupancy, which is due to the reinclusion of space following the completion of our asset enhancement project and speculative fit-out works at 347 Kent Street in Sydney. Occupancy will improve as active leasing of this space progresses. I'm pleased to report that we've struck six new leases there over the last four months. Overall portfolio weight in this port has maintained above five years and provides a buffer against sector headwinds. Finally, in Sydney, we forecast the lack of new supply over the coming two years will improve leasing absorption in the office sector. Now I'll hand over to KS. Thank you.
Thank you, Greg. Good afternoon to all of you. I'm pleased to present that the Mainland China portfolio experienced a significant improvement. We witnessed a turnaround in rental reversion, posting a positive 2.8% in FY2023-2024. The positive transformation can be attributed to our strategic approach of filling the vacant space in Link Central Walk, Shenzhen basement after the departure of an anchor tenant. While consumers lean towards rational spending habits, our proactive asset management efforts have yielded positive results. Leasing sentiments continue to remain strong, with our particular focus areas being F&B, outdoor and leisure activities, and sportswear. Average occupancy reached 96.6%, with over 560 new leases signed, demonstrating the resilience of our portfolio as well as our ability to cater to the evolving preferences of our target markets. The acquisition of the remaining 50% of the Qibao Vanke Plaza in February has begun contributing to our bottom line.
Our efforts for integrating these assets are ongoing to ensure a seamless transition into the portfolio. In July, we'll rebrand this asset as Link Plaza Qibao, aligning it with the established brand identity in mainland. Link Central Walk, another growth driver, is currently undergoing a basement renovation with an estimated CapEx of RMB 24 million, targeting an ROI of over 20%. Completion should be somewhere in July 2024. We are excited about the revitalization of this space. We intend to elevate its allure as a vibrant destination within the mall for Hong Kong tourists coming through on weekends, which will encompass a stylish food corridor, a boutique supermarket, in addition to an array of popular dining and lifestyle options. We maintain our focus on creating value through the implementation of asset enhancement initiatives. We'll be rolling out two projects in mainland at Tianhe and Tongzhou.
These two AEIs are projected to require an estimated CapEx of RMB 120 million and RMB 60 million, respectively. Both are anticipated to commence the second half of 2024. The logistics portfolio experienced growth as two assets in Changshu were acquired and added to the portfolio in April and May 2023. The majority of leases in the portfolio include rental escalations ranging from 3%-5%, which are favorable to our cashflow. The portfolio maintained a healthy occupancy rate of 96%. This stability in leasing demand is particularly noteworthy in the Greater Bay Area, fueled by the e-commerce, auto parts, and supply chain industries. Moving on to capital management, we continued to be positioned to leverage on opportunities as and when they arise, bolstered by our solid financial foundation. Our available liquidity amounted to HKD 18.5 billion. After acquiring Qibao, net gearing is now at 19.5%.
By March, EBITDA interest coverage ratio stands at 4.3 times. Average borrowing cost has stayed competitive at 3.78%, benefiting from a fixed-rate debt ratio of 69.8%. The upcoming refinancing, amounting to HKD 19.9 billion over the next two years, is well staggered. Our debt maturity profile is 3.0 years. Our financial stability is reinforced through FX management, which includes extensive hedging of non-Hong Kong dollar distributable income and the currency risk of overseas assets, alongside capitalizing on lower RMB interest rates and generating positive carry by increasing RMB asset hedging to now over 70%. Our A ratings with all major credit agencies have been maintained, providing us favorable access to capital and maintaining competitive financing costs. This strong position is evident in our key financial covenants, which remain well below the threshold set by these agencies, underscoring our robust financial health, providing us capacity to capture acquisitions and other opportunities.
Our portfolio value increased by 3% on a half-year basis. Excluding the acquisition of Qibao Vanke Plaza, the value of our investment properties would have decreased by 0.3%, half on half. This decline is primarily attributed to the expansion of cap rates, especially in the office sectors. On a like-for-like basis, excluding the additional 50% stake in Qibao and the acquisition of two logistics assets in Changshu, the valuation of the investment properties would have declined 4% year-on-year. I'll now hand the time over to John to cover and provide us with more insight about this strategy.
Well, thank you, KS. I'd like to extend my welcome to you all. Thank you very much for coming. You can see on the screen the current state of the real estate balance sheet investments. Through portfolio diversification and optimization, our aim is to strengthen the Link REIT portfolio so that it can withstand varying businesses or varying business and economic cycles and, over time, to decrease the concentration risk. We're closely following current regional repricing trends. We'll continue to look for market dislocation opportunities, which will allow us to deploy our extremely strong balance sheet to accretive investment opportunities in Australia, Singapore, and Japan, or, in short, to match capital to opportunities in order to produce returns for unit holders. We are open to other sectors with growth potential and where they have structural tailwinds. We also continue to monitor other markets for those repricing opportunities.
And in addition, we will continue to evaluate the potential for asset recycling opportunities. In terms of asset management, our asset management excellence, our value creation, and our operational strength are really the key drivers of total return for unit holders. And the targeted outcome, of course, is a confluence of stable income as well as sustainable long-term growth. First and foremost, the point I'd like to make, and I think George did earlier, to a degree, is that Link is already a fully fledged asset management platform with a strong track record in fiduciary duties, in governance, and in value creation. And I think that's evidenced by the very solid and strong results that have been delivered from the Link REIT portfolio over the past 18 years.
As part of Link 3.0, and in addition to managing the Link REIT portfolio, we intend to expand our investment management business by leveraging on our asset and investment management foundation to create value through the matching of capital to our investment opportunities. The benefits from this are capturing new growth through new income streams. And this will be in the form of fees, as well as creating cost efficiencies through economies of scale throughout the business. Finally, and most importantly, we're building on our strengths. And this includes our ESG stewardship, our financial robustness, while we continue to adhere to our disciplined capital management approach. We're also growing our investment and asset management capabilities, which will be done to complement the current focus. And this will help us progress towards our long-term goal to be an industry stalwart in the investment management business going forward.
With that, let me pass to George. He'll give you an update on the market outlook. George?
Thanks, John, for elaborating on our investment management strategy. For those of you who have followed us over many years, you'll realize that this is a significant and essential step in Link's strategic growth path. Unlike buying assets with income streaming to be stabilised, this is a corporate development initiative which will take a few years to bear fruit. We will try to produce some bottom line results as soon as we can. We are building a team to lead this. You see some of them with us today. We have already announced that Duncan Owen is the Chairman-Elect. Today, we announced that Barry Brakey will be a new INED. For some of you who know Barry, he was, for a long time, the head of property investment for Future Fund in Australia. We are looking at both organic and inorganic growth options.
We will update you as we progress. As we navigate the complexity of the global economy, several key themes framing the macro outlook are on our radar. Let me just highlight them briefly. The stronger-than-expected economic data in the U.S. has diminished prospects for rate cuts. Indeed, the Federal Reserve has signaled that it is no longer in a hurry to do so. As such, interest rates are expected to remain high for longer, as we predicted in the early part of 2023. While this may be unfavorable to those who are highly leveraged, we believe this creates opportunity for us, as it excludes marginal players from transaction markets. Furthermore, asset sales at discount to book value due to high cap rates are a way in which deals could be more accretive, despite the higher funding costs.
In addition to tight labor conditions in many developed markets, we think that inflation will continue to be contributed by conflicts in the Middle East, spikes in crude oil prices, and higher costs of shipping attributable to the Red Sea crisis. And so the sustained tight financing condition and high cost of living are expected to continue to weigh on the economy and thus consumer sentiment. Narrowing our focus to a few of the key operating markets. In Hong Kong, consumption is underpinned by low unemployment of 2.9%, which has been stable since December 2023, the potential minimum wage hike of 4.5% to HKD 41.80 as an added catalyst. In addition, the economy grew at a commendable 2.7% in the first quarter of 2024. The inclusion of REITs in Stock Connect announced on April 20th is a positive impetus to Link's future liquidity.
The initiative expands the pool of capital by broadening the investment base. Meanwhile, cross-border consumption has had a moderate impact on the retail sector in Hong Kong. Mainland China is expected to grow at 5% in 2024, despite numerous macro headwinds. Signs of stabilization are arising, but there is headroom for further potential economic stimulus. Nonetheless, weak consumer sentiment remains a risk for us. Singapore's 2024 GDP growth at 2.5% is expected to be supported by manufacturing and services. Macro risks are external shocks and persistent inflationary pressure, with some mitigation by government efforts. The backdrop in Australia is relatively subdued. Inflation has persisted, while GDP is expected to grow at 1.4% in 2024. Meanwhile, net migration growth of 2%-3% is positive for consumption. It is estimated that additional retail spending from annual net migration could amount to AUD 4.7 billion.
In real estate, retail is looking promising, with encouraging leasing spreads while the downward pressure on office rents appears to be bottoming out. The current macroeconomic environment highlights the need to remain vigilant for us, to adjust to the challenges preemptively, and to do the best we can to our ability. Here are the dates for payment of distribution with a scrip election. In a nutshell, just to summarize, there have been many challenges, from flooding to the economic environment, financial markets. At the same time, we see opportunities in markets and sectors that we operate in. We have benefited from managing a resilient and diversified portfolio overall. Despite all the headwinds at Link, we have and we will continue to provide our unit holders with a stable return and sustainable long-term growth. The development of our investment management business strategy is ongoing.
It is a long-term project that aims to create a new avenue of growth by enhancing our capabilities so that we can better match capital with investment opportunities to create value. Now, let's move on to Q&A.
Thank you. Thank you, George, KS, Greg, and John, for the updates and overview. So now we open the floor to Q&A. Well, for those who are here, you can raise your hands, which you did already. And then you can state your name and company. And then for those who joined us online, you're welcome to use the Q&A function to gain your questions. So we may now have the first question. Yeah, maybe Karl first.
Thank you. This is Karl from J.P. Morgan. Thank you very much for the presentation. From my side, I have two questions. The first one is obviously, I guess, the biggest concern from investors, which is, in the past few months, we have seen that in Hong Kong, the overall retail sales are seeing further decline, right? On a year-on-year basis, it's negative. So I'm just curious, does management have any guidance or any expectation on how the tenant sales of Link REIT will be like in the next 12 months? Are we expecting that it might turn negative in this financial year? And then with that, do you have any forecast or guidance on the rental reversion? And also, in a stress scenario, let's assume that, let's say, tenant sales are going to drop by, let's say, 10%, 20%.
Would we have any pressure on further reducing the rents in Hong Kong? So this is the first question. And the second question, it's about the financing costs. As we all know, it seems like interest rates are going to be higher for longer. Any guidance on the average financing costs in the coming year? Thank you.
I'll start with Hong Kong. So a lot of questions in all of that, Karl. I'll do my best to address most of them. I mean, I guess first things first, it's a matter of looking at the purpose of the Link portfolio. And we're here to serve Hong Kongers for their daily needs. So with that, we believe we bring a very strong level of resilience. We've demonstrated that in the results we've just spoken through. No two ways about it. There has been an impact coming through, particularly in the second half of the reporting period. Looking through our numbers, Q3 sales decline was worse than Q4. So we did see some improvement in Q4. But still, if you do the numbers from what we reported at the half year to what we just reported in the second half, our sales did go negative.
So sales growth was negative. We see the moderation of sales performance for Hong Kong to more than likely continue. We believe we're in a position of strength to be able to deal with that, given we've got near full occupancy at 98%. We have very stable and sustainable occupancy costs at 12.6%. Your summation at 10%-20% sales decline is something that's not on our agenda. And it's something that we are not observing in the current operations. But still, the way that I would guide you for leasing reversions is that we are anticipating a fairly flattish year, if flattish is a word. We are in tune to the risks and, I guess, some of the challenges to the market. Some have posed that it's an issue for the northern New Territories. We see it as a broader issue for Hong Kong.
We're not just looking at what we're doing in the northern New Territories. We're looking at what we're doing across our broader portfolio. I'd point you to the fact that we've continued to complete fairly significant asset enhancement projects, which is allowing us to refresh our offerings. At the same time, over 40% of the new 660-odd new leases that we wrote last year were tenants new to our portfolio, coupled with, I think it was around 120 of our existing tenants that grew their footprint with us. Demand and supply is a big part of rental growth and occupancy in any portfolio, whether it be office or retail for that matter. We think the dynamics of our portfolio are pretty sound. We will stick to our knitting of servicing Hong Kongers for their daily needs. That's very clear.
I just want to ensure that you continue to distinguish our portfolio from other landlords in Hong Kong. As Greg said, we do serve the daily need of a lot of Hong Kong people. Convenient retail on its own means that you don't go to Shenzhen to buy your grocery on a daily basis. Weekend, we see some weakness. And that's where we want to continue to refine the tenant mix, making sure that we continue to be relevant. So we bring in new brands, as Greg has already mentioned, and continue to keep very high occupancy so far. I think if you stand in the shoes of the tenant, then if they need to control costs to deal with their own business challenges, then they need to find shops, restaurants, locations where they have the highest productivity.
I think what we have provided to them is guaranteed footfall because people are living right next to it or above it. That continues to be the case to attract people. So if I want to decide to locate in Mong Kok or Tsim Sha Tsui, I want to make sure that I actually have more shops at the Link portfolio. And that's why we have this queue of tenants coming in. So I think there is challenge overall. We're not complacent. But at the same time, we are not destination mall. We have maybe one or two that we call destination mall, but we are not really. And so the challenges are not the same as some of the other landlords.
We hope that with what the team continues to focus on, which is continue to follow our shoppers, what they want, and provide that in a convenient location, in a good shopping environment, then we will protect that income financing.
On the average borrowing cost, we delivered at 3.78% for the full year. If you look at the profile of the hedging at 70% and also the fact that HKD 9 billion will come due this year, so we have left that unhedged because we are going to pay down using the unit holders' funds and the fact that RMB is also only about 70% hedged. So we do have quite a lot of ability to continue to use RMB financing to help carry over some of the financing costs versus the HIBOR. So I think when we look at our own forecast, assuming HIBOR stays where it is and so far it's been more stable than the last two years, we expect the ABC to be hovering just slightly below 4%. So not a major movement in that sense.
It's important to look at the color of the bar as well, right? So someone has asked us a question about the blue bar coming up. That's a bond, right? So we'll either replace it with a bond, and the bank has been chasing after us. That's why they're in this room. And maybe we'll replace it with some bank loan. But when it comes to 2025, 2026, or 2026, 2027, where the bar looks higher and maybe some will ask, "Oh, then you'll be challenged," but these are bank loans. So we can start talking to the bank early compared to bonds where you can't. And so I think we have we'll say we have foresight, but we didn't.
But it so happened that I think the way that we have made sure that maturity each year is not that high, the composition, whether it is bank loan versus bonds, is also managed in a way that I think we can manage our average borrowing cost quite well.
Thank you. Can we have another question? Sam? Maybe Sam first.
Thank you, management, and congrats on the great results. This is Sam Wong from Jefferies. I have two questions, if I may. First one is on China. So the China reversion had a nice catch-up in the second half. Just wonder how we should think about the China reversion for next year. And the second question is on Japan. I think John just mentioned that Japan is a potential market. So could you share more details as to which asset class we are focusing on and any timeline for our venture into Japan? Thank you.
On the China rental reversion, I think indeed we've tried very hard the last 6 months to get ourselves out of the negative rental reversion you saw in the first half. I think the way I will look at it is that it remains a challenging market simply because the spending is not strong per footfall. But we do have more footfall than pre-COVID. And if you look at the quality of spend, clearly the discretionary part is starting to taper off. A lot more focus on F&B, leisure, entertainment, which in a way can't pay as much rent or high OC. But I think where the team has comfort is Central Walk basement is now being rebuilt into a grab-and-go smaller shop, higher sales per sq ft versus a restaurant that maybe does 1.5, 2 turns per meal.
We think that we would be able to do a low single-digit flattish rental reversion, not willing to see the negative anymore. The other dimension is clearly, with all the changes in the market, the way to look at it is with the more footfall, how do we generate higher marketing income? It's not always about the red lines, the leasing. There's a lot of money in marketing when you have catchment. You have defined demographics. So there are a lot of things that we are doing. And my view is that look at the MPI as well as the rental reversion because a lot of things may not just come through a 2.8% going where the business is.
So we are getting more and more creative in how to run the China business, given that you have to really sweat the assets versus the last 20 years where people were queuing to lease space from Gary, from George. Can we come into the mall? Nowadays, we have to go there, and we have to be very creative. But I think the target is that we are not willing to see the negative rental reversion. So the low single digit is where I would target in the next six months.
Without putting a lot of pressure on John, let me just give you a few highlights. We've talked about investing outside of Hong Kong in several countries for several years. Japan has been on that list for quite some time. We've been to Japan for 7-8 years. We have not been able to agree on any deals yet. But also, when we look at opportunities, we're not just looking at, "Oh, there's a positive carry, and therefore, that's the way to go." We're looking at other skill sets that we have, for example, the asset management skill set that we have built up. And so I would use Singapore as a good example as how do you break the chicken and eggs? Asset first or people first? If you don't have people, then sometimes your underwriting is a little bit more conservative.
You never buy the asset because others get it. If you have the people, you have the asset; you don't have the people, then our board will question you, you will question whether we know how to manage it. So John is there to break that. So are you the chicken or the egg?
I'll decline to answer that.
But the point is, we are building a team. We're wanting to make sure that we get to look at these assets to make sure that we can tell you we know how to manage it. We know that there is not just asset management, but asset enhancement if there is improvement. And that's one of the experiences. I guess John can talk about his own experience in a different organization doing a lot of improvement in assets, producing good return. And he will be building his team. And give him some time.
Yeah, I think that's right. I think the only thing I would add, I mean, I have a 30-odd year association with Japan. So I've seen a few cycles there. I think it does remain an interesting market. As with all investments that we look at, everything has a high bar to cross. To George's point, it needs to be something that is the right asset at the right price and that we can deliver in terms of the improvements. But I think there are still opportunities there. I think in a macro sense, the ability to raise interest rates by too much is impeded, obviously, by the significant debt-to-GDP ratio. Again, at the macro level, perhaps that means more declines in currency together with a significant yield gap over the funding cost. To George's point, that's fine. That's the macro.
But we buy buildings one by one. So every asset has to stand on its own feet. And if you've looked at our style over the last sort of 18 years, which I've only recently sort of become a part of, the ability to do asset enhancements in order to manufacture returns is as important or more important than simply taking a directional trade. So yes, we're looking. It's part of this business of matching capital to opportunities, which is as valid for the balance sheet as it is for third-party capital. But everything will have a high bar to cross, if that answers your question.
Okay. Next one, maybe Raymond first, and then we'll have Mark afterwards.
Good afternoon. This is Raymond from HSBC. Thank you, management, for the time for my questions. So I have two questions. The first question is about asset recycling initiatives that the manager mentioned. So with the current scenario, they're just high for longer. And actually, we have been discussing for the Link 3.0 strategy for a while. Can management share with us the update? Will we see some more positive developments on it in the next 12 months' time? Can you share more can you share with us more color? These first questions. And the second question, actually, is also the first question that investors have been asking a lot, which is the cross-border consumption trend. So can management share with us, in terms of the performance for shopping malls in the Central Walk in Shenzhen, which has been delivering very strong performance recently?
How should we look at actually, can management quantify or share some more data points in terms of impact for the trade mix, like for your Shenzhen malls or the malls near the borders? Thank you.
I'll talk about asset recycling and 3.0. I'm sure there will be follow-up questions. We have been looking at different opportunities to recycle assets. We've talked to a number of parties. Obviously, while John mentioned that we have a high bar in looking at investment, potential buyers also have a higher high bar for their investments. We need to look at whether it is worth recycling just for its own sake. So if we manage to sell something let's say that even if it is valued at 4% and then we manage to sell it at 4.5, but we're buying something at 6%, that's okay. If we're selling something at 4% and the growth is, let's say, 5% a year, but we're buying something that will grow at 8% a year, that's okay too.
I think it is important that we look at it on a portfolio basis and how we reconstruct it rather than just looking at a pure asset and say, "Oh, whether we buy or sell it at valuation or above valuation." We're looking at a number of opportunities. As usual, once we get to a stage where we should announce it, you'll be the first one to hear about it. Link 3.0, I think it is a challenge for you to model it. As I said in my earlier remarks, we are building a business. We're building the team. It will take a little while. There will be a J-curve. But that J-curve with a number of people compared to our very large portfolio with NPI coming in is actually not that significant. But the point is, it is very difficult to model it.
We've been looking at different scenarios and whether John will launch his first fund very soon or will do an organic acquisition of a platform, all these possibilities. I appreciate that it's hard to add a line in your spreadsheet to model this. The timing is uncertain because we're dealing with quite a lot of different possibilities. We strongly believe that within the next 12 months, we will be able to see some action. Pressure on John. We do see it because I think we are getting to a stage where there is already a clearer signal that, while it is high for longer, but it's not high for longer, but not much higher. It may not come down yet. That is a stabilization in the financial market where LPs are starting to think about, "Oh, I don't want to be late in deploying.
I want to be early. I have capacity to live through a little bit more downturn, even if that happens, but we're reaching the bottom." So from our conversation with potential investors, there is such opportunity both for fundraising and also looking at acquiring assets. Unfortunately, it's difficult to time, hard to quantify. The thematic will be, I think, what will be clearer is we have struggled over the last many years to do value-add and opportunistic investments. Doing a development, which is obviously opportunistic, we have to forecast a leasing income five years from now, seven years from now. We are used to asset enhancement where we know, especially for our own asset, 60% of the tenants will come back and then model it out, and the risk is a lot lower. So the core core plus will stay within the balance sheet.
Where the balance sheet is uncomfortable has been value-add and opportunistic investment where maybe some of our other investor, different capital, will be more comfortable with. Also, with value-add and opportunistic, most likely, there could be a period of time there is no income. Whereas for the REIT, we want to continue to sustain this growth in income. So I think we see that people who invest in Link REIT have actually bought two things. It's a stable security of a REIT and a fund manager that so far spent the last 18.5 years managing only one REIT. What we are saying is that this will change, and we will be managing more than one fund. So that's the big strategic move that we have announced. We are putting more and more pieces in place.
That will hopefully deliver better result, better fee income, whether it is from AUM fees or carry interest, which will add to the return of our unit holders. Cross-border.
Do you want to talk to Mainland, KS?
I'll talk about the overflow. Greg can talk about the leakage. Since I look after the China portfolio and I see what's happening in Shenzhen. So I think the truth is, pre-COVID, we were looking at about 30,000-40,000 footfall a day in the old Central Walk before we bought. We did our AEI through the COVID. Footfall dropped to something like high teens. Coming out of COVID, it was about in the 20s. And then slowly, with the borders opening at the peak now, we are seeing up to about 100,000 footfall, of which half are Hong Kong day trippers or Hong Kong residents. And I think what we have started to see is that clearly, a lot of the upside now is coming from GTO because when we started leasing out after the AEI, it was a pretty gloomy period.
And where we have seen now is in the portfolio, Central Walk is actually logging in probably one of the highest tenant sales per square meter, crossing the 2,000 handle. And OC has come down to low teens, which is quite spectacular for mainland. Mainland, we usually operate high teens, low 20s. That said, a lot of the spending is on food and beverage, entertainment, leisure, not as scalable as fashion, accessories, personal care, things that you can buy in bulk and carry back. And I think where we are now in this whole game in Shenzhen is we have terminated Carrefour in the basement, some impact to valuation. Now, we've brought back the space with a B1, HKD 25 million investment to create a. I will keep you in suspense. You can go and see it in July when it's done. A zone.
We name it as we gave it a name. There'll be food. There'll be grab and go. There'll be fast fashion and things that when I curated it, it's clearly things that you don't get in Hong Kong. It should appeal to our residents going across for a long weekend, looking very optimistic that we are able to then achieve that 20% or more than 20% IRR that we are looking for. So the simple change, I think, is when we bought the mall, there are a lot of Hong Kong brands there for the people in Shenzhen to go to shop. Now, because Hong Kong people go to the shop, there's no point having Hong Kong brands there. And so we're putting a lot more mainland Chinese brand and cuisines. And that will continue to evolve. And that's what we do to assets.
So we are going to continue to ramp up the rents because I think it's a bit under-rented now. And how do we do it? These are all trade protocols or trade secrets that we work on. But clearly, the good news is Central Walk, along with Qibao, got into the top 50 malls in China. And that is a very quick turnaround for Central Walk. So that said, I'll leave Greg to explain how we are coping with the perceived leakage that everybody's so worried about. But life goes on.
To just touch on Qibao, since you just mentioned, when we were negotiating with the seller, we didn't know that they were in such trouble. So we could have, if we knew, we would squeeze a little bit more. But the main point is this is a very big shopping center. We gain not just the financial return, but a lot of tenant relationship that we didn't have in the past. And that is helping us to then do leasing for the other properties that we have. So it's actually quite significant to us, not just on financial terms alone.
Raymond, I think I've touched on it with Karl's question, but just some of the other patterns. Because what we're trying to find here is what the patterns really are and how we can respond meaningfully rather than just shadow boxing, so to speak. But certainly, the weekend in Hong Kong is a lot tougher than it used to be. And that's where a lot of the impact has been observed. But I guess, most importantly, for our portfolio, it operates quite unilaterally across a given week. So we're not overly reliant on weekends. But certainly, we're seeing an impact on weekends. In terms of our product categories, F&B has been probably the best-performing category. But subsectors of F&B have been the hardest hit. So Chinese restaurants, for example, have been doing it really tough.
So one of the options available to us is to reposition some of those boxes into smaller food and beverage businesses. Other categories within F&B, fast food has been incredibly strong. So it's a matter of us digging into the detail and responding accordingly. You won't see us change our purpose. I spoke at length about our purpose in servicing Hong Kongers for their daily needs. Food-related trades make up close to 70% of our business in Hong Kong. That won't change. But probably the composition will. We will continue to embark on asset enhancement projects. We're seeing good returns on those, but also good participation from retailers and the ability to bring in new trade mix. While KS is sort of not participating with Hong Kong retailers in Mainland China, we're bringing mainland retailers to Hong Kong.
So Gary, who's in the front row there, who heads our leasing business and his team, have done a number of deals recently with mainland businesses who have been expanding into Hong Kong, predominantly in the food and beverage space. But look, the challenges are not lost on us. We are an active manager. We'll continue to actively manage our book. We've got a very strong team, a very focused team. And I think, in a relative sense, we're really well positioned.
Okay. We have 5 more minutes. Hopefully, we can take 2 or 3 more questions. Maybe Mark first, and then we can have Cindy afterward.
Thank you, management, for taking my question. This is Mark from UBS. So I got three questions. The first one, I think KS just mentioned a pretty interesting thing. It's called dynamic pricing car park model. So could you elaborate more about that? I think that's the first one. And secondly, it's about the NPI margin. So how should we look on the NPI margin going forward? I think this year is about 74%. And lastly, it's about buyback. I think management in the announcement mentioned we will do some buyback going forward. Just want to check about the scale and also if any quarter is targeted. Thank you.
So Mark, just on dynamic pricing. So we're in the process of embedding a new car park management system across all our 121 facilities here in Hong Kong. So we're about 65%-70% of the way through that installation. And that system gives us the ability to look at the concept of dynamic pricing. So we have a lot more access to real-time data. And we've got a lot more with regards to direct payment systems that we can embark on with our customers. So what that dynamic pricing model looks like, I can't tell you at the moment. All I can tell you is it's a concept that the system and the integration of that system allows us to investigate. And it's something that we'll investigate over the next 12 months or so. With regards to the NPI margin, so we're a little over 75%.
It was down from last year. We saw expense growth of about 9% here in Hong Kong, largely driven to the minimum wage increase, but also some one-offs with regards to the September Black Rain that we had. We obviously had some impacts there. We've embarked on extra marketing activities to try and circumvent some of the pressure from the north. I'm hopeful that we won't see any further erosion on the NPI margin. As we've invested in technology and systems in our car park business, in what we've just spoken about, we're looking at numerous projects across our platform that can help replace really repetitive, onerous tasks across what is a very large business for us and try and automate whatever we can. A real focus on managing those cost pressures.
There will be things that hopefully we can address in the foreseeable future and bring back to this sort of a forum.
Have a look at the slides. If you need a little bit of a hint to what it might look like in the past, you go to a car park. There's a printed price for how many hours, what time. Now it's an LED. LED means you can change every minute.
So similar to the LED screen, we don't have a structure on buyback that we want to announce today. At any time, it could happen. It can change any minute. If the stock price looks highly dislocated, undervalued, we are not in blackout. Clearly, I think we do have the capacity to support the buyback, which we have done. In the last round, we spent about HKD 1 billion, bought back about 24 million shares at about HKD 38-HKD 39. And lo and behold, the market continues to have a rising interest rate environment. The unit price came down slightly. So I think at every point, it's a different way of looking at the relative and comparative value of our shares. But that said, we are not going to sit around doing nothing if it goes into an area or range that we think is unreasonable.
We do have the support from the board to do a buyback.
Okay. So we will take the last questions. Cindy.
Thanks for the opportunity. This is Cindy from Citi. So I have three quick questions. One thing is on rental reversion. So if I remember correctly, pre-COVID, we used to have occupancy costs of, say, 13.5% or above that level versus current 12.6%, I guess. Do we still see room for us to slightly move up to the ladder or so? So this is the first question. Second is on interest income, actually. So apart from an increase in cash balance history, anything specific we have done for cash management to fill a better interest income just so related? And the third thing is M&A. So apart from what you have mentioned, so generally, would you say this year as a better or worse year for M&A comparing with, say, past one to two years?
Any additional color you could share on that? Thanks.
So just on the reversion piece and specifically occupancy costs, there is room for movement there. But given the cost pressures more broadly in the market, we just spoke to in answering Mark's question about 9% expense growth, that's something that our retailers are experiencing as well. So it's a challenging market with inflation and cost growth. Our op costs at 12.6% across the portfolio give us room for maneuvering. But ultimately, we'll look at what are the right long-term decisions for us to take with our retailers. Portfolio occupancy is an incredibly important measure for us. And if in a period of some dislocation, we need to sacrifice a little bit of reversion for occupancy, we'll make whatever is the right decision at that point in time.
Yeah. I think on the interest income, it's largely the full-year effect of the rights issue proceeds. We have HKD 18. We took some, then we paid down about half. We're just sitting on another half, collecting 4%-ish. So I think that's that HKD 551 that you see. Nothing fanciful. We are not allowed to be too sexy with the cash we hold to buy different types of products other than to buy back our own shares, which we did some. So this amount most likely then will be redeployed again as refinancing needs appear. Thanks.
Yeah. I think if we're talking M&A as it relates to Link 3.0, I would say yes. As the interest rates remain higher for longer, it sort of squeezes more businesses and more platforms. And I think in the investment management business, some of the biggest challenges that people have had is that they've had some dislocation in their recent track record because of the problems in China. So for most people, if their last vintage was somewhere around 2017-2019, they were quite likely to have been reasonably-sized investors in China along with the rest of the pan-regional strategy. And so the difficulties in China may well have dented most of their investment performance across the rest of the portfolio. So I think that leaves the market, for some people, a little challenging in terms of new capital raising.
I think overall, the capital raising market is relatively slow because of things we know, like the denominator effect and the fact that you can get 5% in U.S. dollars in cash. But for the right teams with the right track record, it's still doable. So the simple answer is yes. I think there are more opportunities. And I think there will continue to be more opportunities for so long as we stay, for want of a better description, higher for longer.
Yeah. We are going out with no bad track record because we have no track record. So I think that helps. I just want to touch on two points as a sort of concluding remark. One is one thing that we presented to the board on a regular basis that we don't really you don't see it in numbers. And we present it in slides from time to time. The team really have spent the last 2-3 years spending a lot of effort in upgrading a lot of systems, process, people, etc. And that is so important for us to set the foundation for our next stage. And so every piece of software, from ERP to lease-managed CRM system to HR, all been upgraded. And by the end of this year, we'll all be done.
And that also allows us a very quick integration and alignment when we do acquisitions of platforms or people or assets. The second point that I want to talk about very briefly is that we have been subject to a certain amount of misunderstanding over the last financial year. We have a number of meetings with different investors and some analysts. And the focus is really on the general topic of executive compensation. We are changing the disclosure in this year's annual report to provide more detail. The misunderstanding is that unit holders obviously have suffered as unit price has come down. The disclosure does not show how executives actually have pay cut by a drop in the value of long-term incentive plan and also in the vesting amount. So the disclosure has always been on the grant value and the grant amount.
If you work hard enough and flip through four different sections in the annual report, you should be able to find out that the valuation of what executives receive have dropped probably about 20%-30% at least in the past few years. But it's not evident easily. So what we're doing is trying to put it all together in two pages so that you can see it without flipping through different sections. So we want to reduce that misunderstanding. We're also showing, which you can, again, flipping through different sections, the holdings of at least KS and myself as executive directors. And so you can work out just how much we have suffered with unit price drop as well in line with our unit holders. I think these misunderstandings have caused a lot of issues with some investors, I think, inappropriate in many ways.
They have all been disclosed in different parts. I think it's just hard to read. We're taking our disclosure to a standard, not quite the Australian disclosure level yet, but getting a lot closer. We don't have vote for pay in Asia. We believe that from a disclosure point of view, since we talk to all the leading investors around the world, they expect to see us as a world-class investor. We will behave like that. We increase the disclosure as a result. We're not going to get there in one place sorry, in one step because we're doing a compensation review as well as we move into Link 3.0.
But do want to be transparent about what we're doing and hope some of you in the room who have talked to us in the past year do pick up the annual report this year and see the improvement we've done. And we are going to continue that in that path and trying to show you more that the incentive, both up and down, is totally aligned with our unit holders. And so if our unit holder can appreciate that, your report should report that. I think some of the misunderstanding that has happened in the last 12 months, hopefully, will go away sooner. Thank you.
Thank you. Thank you, management, for the sharing. George, for the closing remark. Everyone for joining us today. So this comes to the end of the announcement briefing. Have a good evening. Thank you.