Good morning, everyone. A very warm welcome to you all, and thank you for joining us both in Hong Kong physically and online. I am Michael Smith, the Chief Executive of Hongkong Land, and with me is Craig Beattie, our Chief Financial Officer. We have a little bit to get through today, so I want to keep this as punchy as we can, but just give us some forbearance.
As I near my one-year anniversary as Chief Executive, I have had the pleasure of engaging with many of you on various road shows and conferences. I am incredibly humbled by the support and endorsement since the launch of our strategic vision 2035 in October last year. I would like to take a moment to thank all of you for your interest and feedback over the past four months. There are seven key areas that keep me busy, and sometimes awake at night.
These include the first three, number one, two, three, is capital recycling. I know how important that is to everybody in this room, and it is incredibly important to me and my management team. Number four is to ensure that our two key flagship projects, Tomorrow's CENTRAL and Westbund Central, become world-class examples that underpin our vision to become the leader in Asia's gateway cities focused on ultra-premium integrated commercial properties. The next thing is to strengthen our leadership bench by bringing in key new management. Next is to implement a performance-based culture, a long-term incentive plan to align senior management interests with shareholders on total shareholder return, as well as a revamp of bonuses and incentives for all employees. Last but not least, is to continue to deliver and, where possible, exceed expectations that the market has placed on us, evidenced by our 5% increase in full-year dividends.
We will continue to engage with investors to ensure we are clear and transparent in terms of how we are progressing towards our targets. Now, let me talk you through some of the details of what I just outlined, as well as go through our key financial results for 2024. We will have plenty of time for questions following the presentation. For those of you watching via the webcast, please send us your questions through the website, and we will include them in the Q&A session. Here is the structure of today's presentation. Without any further ado, let us get started. Delivering on our strategy. As many of you in the room will remember, back in October 29th of last year, we set out a new strategy grounded in Hongkong Land's now 136- years heritage. Importantly, we also set out an ambitious, bold set of 10-year financial targets.
Our vision is to become the leader in Asia's gateway cities focused on ultra-premium integrated commercial properties. We will do that by delivering growth, by allocating our capital in the segment that we know best. Actively recycling capital to invest in future growth and pivoting our business away from the build-to-sell segment. Investing in and executing to the very highest standards our portfolio, our flagship anchors in Central Hong Kong, Marina Bay, Singapore, and Westbund in Shanghai. Underpinning those strategic priorities are the 10-year financial targets that you see here. Doubling our recurring underlying profit, doubling our dividend per share with an aim for mid to single-digit annual growth in DPS. So this year's 5%-6% is within that target. Growing our AUM to 100 billion with meaningful participation from like-minded third-party capital.
Recycling up to $10 billion of our balance sheet with an aim of $ 4 billion- $ 6 billion by the end of 2027. The execution of this strategy is founded on the approach that we lay out here, which shows how we are reorientating the business to deliver that strategic vision. Firstly, we will strategically focus on investing, again, I am going to keep repeating this, ultra-premium gateway assets in existing key markets, whilst also looking for new opportunities in other regional gateway cities. Secondly, we are bringing new capital from like-minded partners to invest alongside us, delivering an improved return on capital. Thirdly, we will recycle up to $ 10 billion of capital to fund this growth. We have stopped investing in our build-to-sell business and are proactively working on accelerating the recycling of capital.
Fourthly, we are evolving our capital allocation framework with more discipline and an absolute focus on creating shareholder value. In the last four months since we were last together, we have made good headway on the execution of this strategy. On portfolio recycling, we have recycled about $300 million of assets over the last 12 months. This included completions of our China build-to-sell portfolios and the sale of a retail asset in Thailand, a non-core retail asset, which we divested. We are continuing to pursue options to accelerate our monetization efforts and look forward to making announcements to that effect over months and years to come. On capital management, consolidated net debt is down 5% year-on-year. Effectively, we have reduced our balance sheet gearing by about $300 million , which is similar to the amount of capital recycling that we have endeavored on.
That $300 million will be used to fund a share buyback, as we have said, but it is also going to be used to ensure that we can grow our dividends. I am pleased to say that we have increased the 2024 final dividend by 6% year-on-year after the last five or six years of our dividend being flat, demonstrating our commitment to a more progressive dividend policy. In line with the strategic announcement previously, we remain committed to allocating up to 20% of net proceeds from capital recycled into future buybacks. As I mentioned, we are very keen to come back to you with announcements to that effect, and then the launch of a buyback. On third-party capital capabilities, we are pleased to have onboarded Michelle Ling as our new Chief Investment Officer sitting here a couple of months ago at the beginning of this year.
She has taken the lead on a whole host of ongoing initiatives, including portfolio recycling. She is also building out our capabilities to partner with capital providers. We have continued to strengthen our portfolio anchor markets with the development Westbund Central and Tomorrow's CENTRAL very well on track. We will provide more updates later. Finally, we spoke at length last October about improving our corporate governance and aligning incentives with shareholders. With the first- ever LTIP at Hongkong Land has been approved by our Remuneration Committee and became effective on the January 1st this year, as we announced last year. That is now in place, and in the 135 years, we have never had an LTIP-type arrangement where the senior management are very much aligned with TSR and shareholder returns.
I'm pleased that the group's leadership position and sustainability has been recognized by the S&P Global Corporate Sustainability Assessment, with Hongkong Land for the first time becoming a member of the Dow Jones Sustainability World Index. Proactive recycling capital, as I mentioned, is the first three priorities of mine, is fundamental to the execution of our strategic vision. We've made incremental progress towards our target of $ 4 billion- $ 6 billion by 2027. In 2024, we recycled over $300 million, predominantly from the wind- down of our build-to-sell inventory in China. What we would have previously done is reinvested that capital into land. The decision not to do that enabled us to de-gear and help fund the dividend growth. Although market conditions remain challenging, sales performance diverged between different sub-markets.
The group's products are mostly in well-located areas and are targeted at upgraders, resulting in reasonable sales volume relative to the market headwinds. In line with our strategic vision, we did not make any new investments in the build-to-sell segment. 80% or more of the recycled capital will be used to reduce net debt and build investment capacity, with the remaining up to 20% of proceeds allocated to future share buybacks and dividend growth. At our core, we are a people business. Hongkong Land, I believe, has some of the best talent in Asia. One of my priorities since joining just under a year ago, has been on reinvigorating our culture as well as strengthening our leadership bench.
We've done that through redefining and communicating to all our people Hongkong Land's new strategic vision, mission, and values, ensuring alignment with our strategic goals and helping to build a more unified corporate culture. The photos there are the town halls that we went on around October 29, the first week of November when we went across and met with all of our team and explained exactly what we hope for the future. Conducting thorough independent evaluations to benchmark key organizational functions in our business. External consultants have come in and looked at our development capability objectively and given us comments, are there any gaps? Have looked at our property management team, something I don't think the firm has done, but by me coming in externally and appointing external consultants to really assess, are we best in class?
Because if we're not best in class and there are gaps, we have to fix them. Investing in human capital by developing existing employees and recruiting exceptional new leaders. On our leadership team, I'm pleased to have brought on board three very experienced executives to bolster our capabilities in key areas. Michelle Ling, as mentioned earlier, is Chief Investment Officer. I think it's 25 years that Michelle and I have worked together, which is a bit extraordinary. Michelle's focus will be on formulating and implementing investment and capital management strategies, while also facilitating the group's growth through strategic transactions. Jackie Tan is our Chief Corporate Officer. In this newly created role, Jackie will focus on organizational transformation priorities, as well as overseeing the company's technology, communications, and sustainability functions. And finally, as announced last week, Stuart Grant will step down from the board.
He's been on the board of Hongkong Land for the last 12- 18 months. He'll be stepping down from the board to take on the role of Chief Executive of Westbund Central, having overall accountability for the development, leasing, and operation of Hongkong Land's most important ongoing project. Stuart has over 30 years of real estate experience, having overseen the management of $20 billion worth of assets across Asia when he was a partner and head of asset management at Blackstone for many years. He's been living in London for the last five years in a joint venture with Brookfield. He's leaving London with his two kids to relocate to Shanghai because of the importance of this project. Stuart has vast experience on how to build unique ecosystems and understands the importance of partnerships, which are key elements that strongly align with our vision for Westbund Central.
As I said earlier, the core of our 2035 vision is a focus on total shareholder return. To sharpen all our focus on TSR, we are putting in place a remuneration framework that aligns our people's interests with those of our shareholders. For the first time in our history, senior management and key individuals in the business will be incentivized by a meaningful LTIP based on two core KPIs. 85% of the LTIP will be driven by a TSR metric, with half being performance against absolute cost of equity targets and the remaining half being against a set of set peers. So we've selected 20 companies at our peer group. The remaining 15% weighting involves sustainability KPIs focused on decarbonizing scope one and two emissions. It's a very, very big change for Hongkong Land. It's a significant part of my compensation going forward.
The LTIP has tiered achievement factors with a management bench sharing in both the upsides and the downsides. It's very possible that if we don't perform, we won't get an LTIP, any type of remuneration to it. So it's really based on ensuring that we drive the share price both on an absolute and a relative basis. We're also relaunching a revitalized STIP for all employees. This cash-based scheme is linked directly to KPIs aligned with our new strategy, including 50% financial and 50% non-financial KPIs. This will effectively shift the group's STIP practices from discretionary bonuses to a structured, targeted bonus regime. Effectively, I have a set of KPIs, or the firm has a set of KPIs, which will be filtered down to everybody across the firm, so everybody is on the same objective to ensure that we meet our KPIs.
In addition, in 2024, we rolled out a minimum shareholding policy for executive directors. This policy requires minimum shareholding at multiples of annual basic salary, depending on function, further aligning the management team's interests and shareholders. So for the tenure of our careers, we will have a minimum amount of shares that we must hold as further alignment of our interests with our shareholders. When we set our strategic vision, we went through what makes Hongkong Land unique, what sets us apart from our competitors, what distinguishes and differentiates us. At the core, it's our idea that experience is central. This idea underpins how we design, develop, and deliver our properties, as well as how we partner with our tenants in managing our properties.
I wanted to show you just four highlights of the creativity, innovation, and placemaking that we delivered on in 2024, and which we plan to continue to deliver on in years to come. Firstly, for those of you who have been to Singapore recently, One Raffles Quay, significant enhancement that we embarked on creating new spaces and experiences in the lobby to elevate the property and enhance its appeal. Revitalizing Centricity. We have refreshed our Centricity tenant app to deliver best-in-class tenant services and improve overall satisfaction for the 12 office buildings in the Central estate. The opening of the Sotheby's Maison, I am sure all of you have seen that over recent months. We have partnered with Sotheby's to open their new Maison in Chater House, creating a truly unique place, not only in the Landmark, but globally.
Sotheby's has not undertaken anything like this and having a real sort of public face anywhere else in the world. The West Bund Orbit, a world-class exhibition hall, which we opened, has already become a sought-after venue for luxury brand events in Shanghai. Pretty much every weekend there is another event at that property. Tomorrow's CENTRAL is a bold undertaking and something that I firmly believe only an organization like Hongkong Land can successfully deliver. We are proud to be partnering with some of the world's best luxury brands to completely refresh large parts of the offering of the iconic Landmark. Not only is this a testament to the belief that these brands have in Hongkong Land, but also in the future of Central and Hong Kong. Most importantly, the renovation program is well on track.
Any of you walking around today will see the signs of this taking place, taking shape. In terms of phasing, we expect two openings later this year in 2025, three more openings in 2026, two in 2027, and then the full completion with the opening of Hermès and CHANEL in 2028. These openings are deliberately phased so that the portfolio remains active throughout the transformation, and each brand is able to create its own unique moment. It is going to be very exciting to attend all of the openings for these Maisons because some of them are going to be incredibly spectacular. Well, all of them will be incredibly spectacular. Now some of the highlights. We continue to strengthen our anchor flagship portfolios in Hong Kong and Singapore. The group's Hong Kong office portfolio continues to outperform versus the market benefiting from a flight to quality, despite well-documented market headwinds.
As mentioned earlier, we have revitalized our best-in-class Centricity app and continue to refresh the services we deliver to our tenants. On Hong Kong retail, Tomorrow's CENTRAL transformation, as I mentioned, is well underway and working very closely with our luxury brand partners on bringing to market world-class Maisons. In the meantime, Landmark remains active and achieved positive rental reversions in 2024. Our Singapore office portfolio, the diversification that we benefit from continues to perform well. All major anchor tenants were retained during the year with positive rental reversions. Efforts continue on accelerating capital recycling with contributions from both the build-to-sell segments in China and Singapore increasing compared to the prior year. Provisions against China build-to-sell inventory, which were largely recognized at the half year, were done to align prices to market to improve turnover.
We're very much focused on ensuring that we can repatriate that capital and reinvest and close the gap that's prevalent in our share price. In China, we're making good progress on realizing our vision for Westbund Central. The first phase of the project was completed during 2024. The luxury apartments for sale outperformed all expectations, with all 80 units sold and now handed over at a price of CNY 178,000 per square meter, amongst the highest average prices for residential product in the city. Separately, the initial phase also saw the completion of over 180 units of the group's proprietary branded serviced departments, Westbund Central Residences, and 10,000 sq m of retail, both achieved high occupancy. The next phase of the project is expected to complete later this year.
We've already secured commitments from a strong mix of domestic and international tenants, and as Craig will take you through, there's over 80,000 sq m of office in the next phase. All of that office space is committed. Going into the marketplace with a lot of headwinds in the Shanghai office market, I think is testament to the quality and the vision that we're building. Despite uncertain market conditions in 2024, recurring rental income was resilient. Growth in Singapore and the Chinese mainland partially offset lower contributions from Hong Kong. Future rental income growth is underpinned by our commercial pipeline, as well as reinvestment and revitalization of our existing flagship assets. The group continues to maintain a strong balance sheet and net gearing position. Our average borrowing costs actually fell to 3.6% from 3.9% previously, with diversified debt facilities in place.
The final dividend declared is $ 0.17, which is up 6% from the prior year. On sustainability, I'm pleased to see the group's efforts to become a market leader and fully embed sustainability considerations across its operations are being recognized by leading grading agencies. Turning to an overview of the results, all of these monetary units were in U.S. dollars. The group's underlying profit, including China non-cash provisions, remained resilient at $724 million, down 12% from the prior year, primarily due to lower contributions from the Hong Kong Central portfolio, particularly as it relates to the Landmark refurbishment. Net debt declined by 5% to $5.1 billion, as the group made no new investments during the year.
The net asset value per share stood at $13.57, down 6% compared to the end of 2023, mainly due to the revaluation losses on the Hong Kong office portfolio, and that really is due to market rents assessment by our independent valuer. The board has declared a final dividend of $0.17, bringing the full year dividend per share to $0.23 per share, up from $0.22 years previously. Finally, I'd like to take a moment to highlight the resilience of the group's recurring rental income portfolio. I think a really important piece of Hongkong Land is the resilience by continuing to focus on being the best in what we do, by focusing on the relationships that we have with the 2,500 occupiers across our portfolio. Despite the volatile and in some markets, difficult trading conditions over several years, we've still created an incredible amount of resilience.
Rental income from the Hong Kong Central portfolio declined due to market uncertainties and temporary tenant movements at Landmark, but that was partly offset by growth in Singapore and the completion of growth in our Chinese mainland properties. I'd now like to hand to Craig to take you through our leasing update.
Thanks, Michael, and good morning, everyone. Let's take a closer look at our leasing performance for the year. Let's start with Hong Kong office. Obviously, we generally know that the office market was pretty challenging overall, but for us, our portfolio produced, I think, a pretty stable performance, and we continue to outperform the broader market due to our prime CBD location and also our premium offering. Keeping in mind that Grade A office vacancy in Central stood at 11.6% last year, our vacancy of 7.1% has comfortably outperformed the market. Our overall weighted average lease expiry stood at 3.7 years, whilst the weighted average lease expiry for our top 30 tenants, which occupy close to half of our total office space, was actually 5.1 years, so higher than the average overall.
Eight of our top 10 tenants have been with Hongkong Land for over 10 years, and six of these have been with us for over 20 years, which really, I think, gives some insight to our client management and how we like to work with our tenants for the long term. At the end of last year, 13% of our Hong Kong office portfolio was due to expire this year. At the end of February, that 13% has fallen to 6%. From a risk management point of view, we're already quite well covered this year in terms of upcoming expiries. If I look at the Hong Kong office market overall, we're seeing a sustained flight to quality trend with recovering capital market activity, which is often a leading indicator for demand in core Central.
Our Central office portfolio is closely linked to capital markets, as many tenants are lawyers, asset managers and consultants, plus banks. IPO activity is expected to improve this year, which is a key driver of interest in our office spaces. Despite a subdued market, average rents at our Central portfolio have continued to significantly outperform the market due to our unique ecosystem, as well as the scarcity of high-quality, well-managed space in Central. We are well-placed to take advantage when the market turns and demand improves. Let's jump now to the retail portfolio in Hong Kong, which of course is luxury-focused. Average retail rents increased by 3% in the year to HKD 210 per square foot, a second consecutive year of growth. This was driven by positive base rent reversions reflecting the strength of the Landmark brand, despite challenges in the broader luxury retail market.
Occupancy was 97%, down slightly due to the Tomorrow's CENTRAL upgrade works. Our weighted average lease expiry at the end of December was 1.8 years, and we expect this number to increase as the new long-term leases start to commence in the luxury Maison stores that we've previously announced. Tenant sales were down 8% compared to 2023, but bear in mind, 2023 was a record year for Hongkong Land, and tenant sales last year in 2024 were on a par with those of 2018, our second-best year ever. Luxury retail dynamics in Hong Kong are changing, and we think Hongkong Land is really well-placed to be a beneficiary of those changes, a lot of what approach we're driving ourselves through our portfolio reimagination. The simple fact is that luxury retail will now be driven more by Hong Kong residents than spending by tourists.
Just to remind you, 85% of Landmark sales come from Hong Kong residents, with 15% coming from tourists. The stats on this slide show Landmark continues to benefit from these trends. Our BESPOKE loyalty program continues to define the ultra-high-net-worth market. BESPOKE VIC sales were up 1% year on year, demonstrating the quality and resilience of Landmark's VICs, and these VICs account for 80% of total sales in our BESPOKE program. Last year, the top 100 local spenders in Landmark in aggregate spent HKD 1 billion. Amongst these top 100 customers, we saw mid-single-digit sales growth, which I think is remarkable given the overall market environment. Landmark continues to be the best place, I think, for high-net-worth individuals to shop. Also, the transactions that we've seen continue to grow, not just with the top customers, but generally across the board.
The top 10 transactions totaled over HKD 200 million last year, which was also up 1% year on year. Generally, we've seen 6% growth in high-value transactions on our individual customer basis. So pretty strong stats for 2024 overall. Let's jump to Singapore office now, where our portfolio continued to perform really well, driven by a flight to quality and limited new supply, despite a moderation of demand in the market there, generally. Average rents continued to show growth and were up 2% compared to 2023, and positive rental reversions were achieved during the year, and the portfolio was effectively fully let. Tenant retention, same as Hong Kong, remains a key strategic priority for us, and our top 10 tenants have, on average, been with the Hongkong Land portfolio for 13 years, and with one of them being there for 25 years.
These top 10 tenants have an average weighted average lease expiry of 4.2 years and represent 43% of the overall portfolio. Over the next few years, we expect limited new supply in Singapore CBD. The government has been moderating supply, as we all know, and I think this scarcity has led to higher absorption rates, meaning that available space is being occupied quite quickly by prospective tenants. As a result, we've seen vacancies across the market decrease, and we expect to see a continuation of the strong demand for the office space in the CBD, which should be reflected in growing yields and ongoing resilience of our portfolio. Let's move to Shanghai now and the Westbund Central project. As Michael mentioned, a couple of milestones achieved in 2024. The residential for sale component was completed last year and was a resounding success.
All 80 units were sold out on the day of launch, and as Michael mentioned, they were sold at some of the highest prices in the city overall, which I think demonstrates the high quality and the strong brand recognition of Hongkong Land. The first batch of our adjacent propriety branded serviced apartments called Westbund Central Residences were also well received, and they are currently over 90% occupied. We will launch a further 800 units in phases under the same Westbund Central Residences brand later this year. The retail offering in the first initial phase, which is smaller in scale and more F&B orientated, is over 80% occupied. Phase II of the project is due to open this year, which as Michael mentioned, has a larger office component to it.
There are four towers here representing 78,000 sq m of office space, and all of these are now effectively committed, which again, I think talks to the quality of Hongkong Land and the project because the Shanghai office market is quite challenging at the moment. As Michael mentioned earlier, we've continued to grow from strength to strength in our sustainability commitments across ratings, decarbonization, circularity, and tenant partnerships. Let's look at the financial results in a little bit more detail. All the numbers on the next few slides are in U.S. dollars unless otherwise indicated. The group delivered a resilient core trading performance during the year, despite the uncertain macroeconomic backdrop.
Contributions from prime properties investment portfolio decreased by $54 million year-on-year, and positive rent reversions in Singapore office and improved contributions from WF CENTRAL, shopping mall in Beijing partially offset the decline from our Hong Kong Central portfolio. Operating profits from our build-to-sell segment, excluding the inventory provisions, increased by $106 million year-on-year, primarily due to more planned sales completions on the Chinese mainland as we accelerate our capital recycling efforts in this segment. Last year, we had some really strong projects in China that completed, including the Westbund Apartments that I mentioned earlier. So despite the broader challenges, I think some of the quality of our product that Hongkong Land has is reflected in the numbers last year.
We did, as we noted earlier, take a non-cash inventory provision last year amounting to $314 million, which was recorded on selected projects and phases of projects with slow-moving inventory, mostly in non-prime locations. Turning to rental income, which decreased by 2% compared to 2023, and going through each of the segments in turn, rental income from Hong Kong office declined by 5% due to negative rental reversions, although as we mentioned, the portfolio remained resilient overall and continued to outperform benchmarks in the city. On retail, Hong Kong rental income declined by 9% due to planned tenant movements as part of the Tomorrow's CENTRAL transformation, but underlying rental reversions were positive, resulting in a higher average retail rent per square foot last year. There was strong growth in our Singapore office portfolio, as I mentioned, driven by positive rental reversions.
Contributions from our China retail portfolio increased 11%, primarily led by higher contributions by our shopping mall in Beijing following tenant mix changes. Performance from other segments, which include hospitality operations, were stable. Turning to the operating profit of the group build-to-sell by region, please note this slide includes our share of the group's joint ventures and associates. Profits from the Chinese mainland, excluding the inventory provisions, increased by 46% year over year as more projects were completed and handed over to buyers, and these are the high-quality projects that I referenced earlier. Profits in Singapore and MCL Land are recognized on a percentage of construction completion basis, and profits in the year here were also higher as construction progressed on the group's remaining projects. Contributions in Indonesia declined due to less planned sales completions.
On the inventory provisions, these were predominantly in Chongqing, Wuhan and Nanjing, as I said, were on selected projects with slow-moving inventory in non-prime locations. Net asset value at December 31st 2024 was $ 29.9 billion, down 6% compared to the end of 2023. This decrease was primarily from lower valuations for Hong Kong office assets due to the decline in open market rents. This was partially offset by higher capital value for the Landmark retail complex due to the higher expected rents post the completion of Tomorrow's CENTRAL. Positive contributions from our resilient underlying earnings per share were partly offset by inventory provisions in China. There was an accounting reclassification of properties held for self-use in our Hong Kong Central portfolio, moving from investment properties to fixed assets.
Net exchange translation differences or FX movements of $ 163 million mainly related to assets on the Chinese mainland and in Singapore, as both those currencies had a lower value during the year due to the strengthening of the U.S. dollar. Overall, net asset value per share was $13.57 at the end of 2024. Let's jump to dividends, and as Michael Smith said, we declared a final dividend of $0.17, up 6% from the final dividend in the prior year, bringing the full dividend to $0.23. The growth in dividends is in line with our intention to deliver on average annual mid-single digit growth in DPS, as we announced last year as part of our strategy refresh.
Despite a decline in underlying earnings this year, if you exclude the China inventory provisions, which are non-cash in nature, our payout ratio was 70%, within our intention to pay out 60%-80% of recurring income over time. The maturity profile of the group's debt is shown on the left-hand side of the slide, and the debt maturities, as you can see, are staggered over a number of years and are well diversified between both banks and debt capital markets. We recently secured a HKD 12 billion revolving bank facility supported by our 12 relationship banks at good pricing, and thank you to some of our banking colleagues who are here today. The purpose of this facility was to refinance existing expiring facilities, and this new facility are also green in nature, so again, further adds to our sustainability ambitions.
The group remains in a very strong position with respect to further refinancing plans. We have one $600 million bond due to mature in the second half of this year, but we have ample liquidity and therefore we are in a strong position to decide when to tap those markets. Of course, we are also focused on capital recycling and therefore we do expect our net debt levels to trend down over time. The average tenor of our drawn debt at the end of December was very healthy at 6.3 years, and the average interest cost decreased to 3.6%, down from 3.9% the prior year, driven by lower average interest costs in renminbi. The impact of higher- for- longer interest rates on the group is mitigated by having 68% of our average gross debt held at fixed rates.
At the end of December, the group had available liquidity of $3 billion, quite a significant amount. Our credit ratings by both S&P and Moody's remain unchanged at A and A3 respectively. I will now pass back to Michael, who will take us through the outlook for the year.
Thanks again, Craig. Just to wrap things up, looking towards the remainder of 2025. For Hong Kong office, our view is that rental reversions will remain negative, although we are seeing some green shoots in terms of inquiry levels, with demand largely driven by the asset management sector. As Craig mentioned, I think increased capital markets activity in Hong Kong will definitely be a positive for Hongkong Land. We expect the flight to quality trend to continue as tenants continue to prioritize quality of space over size of space, whether it is amenities and services, the ecosystem we have created, or ESG performance. With limited future supply in Core Central, there is potential upside dependent on the recovery of the capital markets activity in the city. For the Landmark, trading in 2025 will be impacted by ongoing renovation as some leasable floor area will be temporarily out of action.
The priority will be to ensure that Landmark continues to have the right mix of offerings to serve customers and office tenants during this period as we work to deliver on our vision for Tomorrow's CENTRAL. In terms of the luxury retail market, we believe ultra-high net worth consumption will remain resilient. In Singapore, we expect both performance of the portfolio and economic outlook to remain stable. With a tightly supplied market, particularly in the Marina Bay district, our portfolio should continue to enjoy very low vacancies. For China, we are cautious on the short-term trading outlook as we actively monetize assets from the build-to-sell segment.
Whilst markets remain challenging, especially for office assets, as we mentioned, the leasing momentum that we have managed to generate for nearly 80,000 sq m of space Westbund Central has been steady, and the next phase of the project is on track to open in the second half of this year. Circling back to our strategy and priorities for the remainder of the year. On portfolio cycling, as I mentioned at the beginning, it is the first, second, and third most important thing that we are all focused on, is to accelerate asset disposal or recycling initiatives where viable. We have not been sitting still and have been pursuing a number of opportunities across the markets in which we operate, although some of them will take longer than the four months since the strategy was first launched.
We do look forward to sharing more good news and good announcements over the shorter and medium term. For capital management, we intend to maintain a strong balance sheet whilst keeping an eye out for strategic investment opportunities. But really the first part of our strategy is recycling capital. That is really the most important thing we are focused on rather than reinvesting those proceeds. So to Craig's point about de-gearing our balance sheet, making sure that we have dry powder to be there when opportunities present themselves, but really the recycling is the first part of the equation. In terms of third-party capital, we have and will round out our capabilities. Our goal is to partner with like-minded capital that also believes in the ultra-premium segment and the strong, high quality of recurring cash flows it brings.
We are not out to just grow AUM for the sake of growing AUM. We are going to look for the LP capital, for the third-party capital that really appreciates the uniqueness of what we have the skill base to do and want to come alongside us. Finally, both our Tomorrow's CENTRAL and Westbund Central flagship projects have seen strong starts, but there is still a lot more to come, and we look forward to sharing with you more exciting announcements that are coming up. Again, I would like to thank you all for your support. We want to make sure that we are very clear and transparent with everything we do, and we are happy to take any questions. Thank you.
[Raymond]?
Three seconds? Pass on up. Okay. Been sitting too long.
Thank you. This is [Raymond] from HSBC. Thanks for sharing a lot more detail about your transformations as well as incentive schemes here to enhance the shareholders' return. Maybe I have three quick questions. The first question, also in line with the shareholders' returns. The first thing we always see that is increase in DPS, but also there is another question too there that you mentioned earlier about the shareholders' return, which is about the buyback program. Because you mentioned that in the three years' time, there will be a disposal of around $ 4 billion-$6 billion.
What should investor anticipate in terms of the timing for the buyback program? What is the amount of the buyback that we should be anticipating in the next 6-12 months? Can you provide some color here? This is the first question. The second question is actually about the Westbund project. It is amazing that
Should we answer that one first?
Yeah.
Otherwise we will forget it. Craig, why don't you, and then I will jump in.
Yeah, I think you've heard the stats properly, $4 billion-$6 billion by the end of 2027. I think as we said at the announcement of our strategy refresh last year, we've been working on capital recycling even before we announced that we were planning to do that. These things take a bit of time. We continue to wind down our build-to-sell business and as we said, $300 million net cash came back to the group. Just to be clear what that is, that's effectively our sale proceeds less cost of sales, less any joint venture or bank funding, less tax that we pay. So the $300 million really is net cash that we have at the group, and that's why our net debt fell at the end of last year.
I think in terms of targets for the year, we're quite mindful not to be giving out big statements about this. But I think, as Michael says, it's one, two, three top priority for the group. We are working on a number of things, and we are hopeful that we can make some positive announcements about this to the market soon. I think just to come back on the buyback piece there's no change in our guidance that we gave at the end of last year, which is that up to 20% of any capital recycling will be allocated to buyback, subject to market conditions and share price. I think that continues to hold. We still believe that at our price today, that this is still an attractive investment option for us as a leadership team, and the board support that too.
I think in terms of the pace of the buyback, really you'll need to see us accelerate our capital recycling and then the buyback will flow through in bigger numbers thereafter.
Just to supplement. The LTIP is quite a game changer for us as well, and we all are very motivated to grow the share price. We've committed to finance through guidelines. So we're always going to be investment grade. That's our focus. We're not going to do a big equity raising. But closing that gap of $13.57 to where we're currently trading, buybacks are obviously a very neat way of doing that. So we're very focused on ensuring that we, like you, want to grow the share price, get rewarded for that, and the buyback is a great mechanism to achieve that. So it's very much top of mind. But as Craig Beattie said, we don't want to give you. I think we were quite bold in saying $4 billion-$6 billion by 2027. I mean, that in itself is something unusual for the Hong Kong markets.
Saying that is sort of a commitment that we are holding to, but giving anything more granular than that, we just sort of risk as these transactions move and evolve. We do not want to commit to a smaller timeframe.
Okay. Westbund? For sure.
The second question about Westbund, because the management has a point of view on this single particular product. This is quite new, maybe for my mind as well. The question is there any bigger blueprint or thinking on this appointment? How should you think of the Hongkong Land Mainland China business? Is it still going to have new entities here? How is it going to make a bigger roadmap of growing this fund management business over there? This is the second question. The last question is just very simple. It is about Hong Kong luxury retail. As many people has been quite cautious about the Hong Kong luxury retail, you have been doing very great job in terms of delivering resilient retail spending here.
Can you share with us year to date, is there any changes in terms of momentum for high-end retail sales in Hong Kong? That is the last question. Thank you.
Why do not I touch on Stuart Grant's appointment? We have been searching for a leader of that project for quite a while because it is just so important. We paid $4.3 billion for that land in 2020. We have committed to an $8 billion or $9 billion CapEx program with our partners. I mean, it is not just a Hongkong Land, but at the broader Jardine Matheson Group, a significant project.
So it deserves the attention of somebody like Stuart. The fact that he was at Blackstone as a partner for 20 years, and he has managed such a massive portfolio across Asia. The fact that he has been with the Brookfield partnership for the last five years, which has done very well, and he is willing to leave London and relocate to Shanghai, is real testament to the seriousness that we place on that project. Also the seriousness that he does.
He is moving his two young children from London to Shanghai, et cetera. In terms of the dynamics of the group, I think that is all it is. It is really a reflection of what we are doing here in Tomorrow's CENTRAL is sort of under our noses, right? We all in Exchange Square, and we can see it. But in Shanghai, it is a little bit more distant. I am spending one week a month in Shanghai. Craig Beattie is up there a lot more, the whole senior management team. So it is not as though the rest of our projects are any less important. Everything is important, but that is really a true flagship, which underpins who we want to be in the future, and we just have to get it right.
Maybe just to add a little bit about Stuart as well, because it is a huge project, 18 million sq ft. I think it is probably the largest in Asia Pacific, actually, probably globally outside Middle East. But I think the appointment of our chief executive is it is not just to get it built. It is to get it built, of course. It is also to get it leased. But most importantly, it is to make sure that the whole ecosystem works effectively, because that is what Hongkong Land is known for.
So the reason why we are really excited about Stuart is not just his asset management capabilities, but if you know him as an individual, he is hugely passionate about placemaking, marketing, branding. So I think it is the whole piece that we really want to try and elevate Westbund overall. Then maybe just rounding out on the retail side of things.
I think year to date, the broader market continues to be quite challenging. I think our sales in Landmark in the first couple of months of the year are down by about 10% or 11% on the prior period. So it's broadly similar run rate that we saw last year continuing. But again, the underlying strength of our VIC continues to be quite phenomenal. I mean, we had an individual customer a couple of weeks ago who spent over HKD 100 million on a few items. So I think that's really our strategy is to have best in class, not just in Hong Kong, but globally, but to really appeal to the very top end of the market overall.
I think the brands acknowledge that. They wouldn't be spending their capital on the fit out, which is quite significant in some cases, unless they truly believe that Landmark is the center of ultra high net worth. So it creates that whole ecosystem. So we have to make sure that the HKD 100 million plus shoppers come to Hong Kong, not Japan, and then come to Landmark and nowhere else.
Karl?
Hi, Karl Choi from Bank of America. A couple questions. First, I want to go back to the LTIP program for a second. Can you give us some sense about the scale? How many shares, ultimately, maximum can be issued? The scope, how many management members are actually covered? You mentioned 20 companies in the peer group. Who are they, or the geographic locations, is this Hong Kong mainland or more APAC in general? Second question is, going back to capital recycling, again, you mentioned you will pursue a pragmatic approach.
I think a question that investors have kept coming, been asking about is in a high for longer interest rate environment, how do you find a balance between you raising liquidity, selling to raise, having a large disposal relatively shortly, but probably will have to at a discount to book value, and what kind of discount is acceptable? Just want to get your thoughts on that. I guess I'll just sneak in a third question. Any update on the platform business in terms of starting conversations with potential third-party capital?
Okay. Maybe I will start on the LTIP. All I can say is that it is very rare in Hong Kong and very rare in Asia, I think, and particularly with the private sort of companies. I do not think we are disclosing the amounts, but I can tell you that it is a significant part of our total compensation. There was some detail in the slide. It is over a three to five-year vesting. It involves all of the executive directors and the key sort of leaders of our business across the region. People who we want to make sure are the future leaders of our business. It is very much tied, as you know, 85% to both absolute and relative TSR. I think being sort of a banker for many years, it has got a lot of elements which should really align our focus and the shareholder return.
But in terms of the actual elements, I do not think there is any sort of disclosure around that or requirement.
Yeah, but I think the-
It will come out.
-the point that was made earlier around it being tied to performance is, we are completely aligned. If we do not perform, we do not get paid.
Yeah.
I think in terms of meaningful contribution or percentage of our total compensation is quite significant. It is not just a token LTIP in terms of a small percentage.
Just on your third point. In terms of the platforms, Michelle has been on board now for three, two and a bit months. She is building out that team, building out the capability, going to PERE conferences, doing sorts of things that we had not done before to try and reacquaint ourselves with a lot of LPs. It is a very discerning LP or partner that we want. It is not sort of a 20% type return type, opportunistic type LPs. We are looking for quite a nuanced group of capital that really understands what we are doing. The focus is now recycling. To your second point, recycle, recycle, recycle is really where the focus is. Then laying all the infrastructure and the groundwork that when opportunities present themselves, that we have the right group of LPs to come alongside us.
On the recycling front, I think the discount point, we get our assets independently valued every six months. Jones Lang has been valuing our investment properties for many, many years. In my mind, that is the sale price. We go out and tell the world every six months what our NAV is. We should not be discounting beyond that. When we have got our build- to- sell product in, we have marked, we have taken provisions on some of our properties to make sure that we can clear all of the rest of our build- to- sell product as healthy margins in place. There is no need to discount below sort of a cost basis.
Some of our commercial assets in China, particularly in some of the more secondary cities, the office markets in particular, that may be an asset class that if we really want to recycle capital, there may be a necessity for discount. We have a lot of other different parts of our business that we can look at as well and different ways and lots of smart people around a table to think about ensuring that we do not have to discount our assets. We are not on fire. We are de-gearing. We can keep de-gearing our balance sheet, keep saving 3.6% interest every time we de-gear. It is not an absolute, we have to sell for the sake of selling. It has got to be part of a whole strategy.
Selling at NAV and buying back at the significant discount that we currently trade at is a very good use of our capital.
Hi, Michael, Craig, this is [Cindy] from Citi. So three questions from me. First, maybe addressed to Michael. Obviously 2024 was a significant year with a lot of changes, and you mentioned your continued priority on capital recycling in 2025. I am just wondering, what are the new things or new milestones that we could expect for 2025? In terms of your focus on capital recycling, how does that translate into, say, your work allocation, your time allocation in between asset class, in between cities, et cetera? This is the first question. The second question is, again, on the $ 4 billion- $6 billion of capital recycling. Should we expect that mostly on the DPs with little portion related to IP, given the, well, obviously you mentioned you are not on fire for sale, right?
Is there any scope that we can expect, say, more determined pace up in DP capital recycling, say, in 2025? The third question is actually on tenant retention in Hong Kong for both office and retail. For office, obviously there is new supplies and there are some tenants moving. How are you key initiator in retaining those tenants? Do you think, say, rent negative reversion is sufficient to retain some of the tenants? Similarly for retail, let us say, as you mentioned, there will be up to 40% of area being impacted by the renovation. Would it affect some of the-
Retail brands decision in whether to stay with your mall or temporarily move to somewhere else, et cetera. Hoping to have more color on that .
Okay.
I am not sure I remember all the questions, but obviously capital recycling is the topic of the day, and everyone is very focused on it. I do have some statistics to just remind you from what we said in October. There are two major categories. There is the build-to-sell segment, which we will exit, comprising over $6 billion. This is of the whole $10 billion, and just under $4 billion from our prime commercial investment property. $6 billion is DP, effectively development property, and $4 billion is IP. From the build-to-sell segment, you can further then split that into three pools. The China build-to-sell is largely residential in nature. There are some commercial assets, but largely residential. That is just about $2.5 billion of the $6 billion.
As that sells down, $2.5 billion of the six will come from that source. Non-core, largely retail assets and pipeline in China is a further $3 billion. These are our The Ring malls, and if you look at our The Ring mall in Chongqing now, in its third year of operation, it is trading very well. It is trading at a very good yield on cost and at a level that we think we could divest it at, just as an example. Some of these assets, we will have to wait for leasing cycles to ensure that the yield then gets to a level that it is cleared in the marketplace. I personally am quite optimistic that interest rates in China may continue to fall for all sorts of different reasons. That will obviously then make capital allocation to higher yielding real estate even more attractive.
There is a number of things that are floating around, but that $3 billion, probably the office piece of that is the most challenging, the office and the secondary markets. But the The Ring series that we have built, particularly Chongqing and some of the other markets that we are building and completing, we are a lot more confident that over time they will be at a level that we can trade out of. The third piece is the other build-to-sell assets across the region. Again, particularly residential. We have quite a lot of residential in Indonesia and Singapore and other markets. That is another $1 billion. That is the broad breakdown. $6 billion, $4 billion. The $6 billion is $2.5 billion, $3 billion and $1 billion.
I think on the residential build-to-sell piece you were asking about pace there, I think we're very focused on recycling out of this segment as quickly as possible, but in a measured way. It's not really sensible to slash pricing, nor is it needed to be done that way. Clearly in China, we've reviewed our portfolio during the course of 2024. We've taken some provisions to mark the pricing down in selected areas. The whole objective of that is to encourage the sales velocities on those projects. As I mentioned earlier, we had a number of really successful projects that completed last year and were fully sold out in China.
I think in Singapore we have an MCL Land business, and there's an opportunity there to potentially look to accelerate the recycling of capital in that business, and we'll look to give an update on that later in the year, hopefully. But I think we've got a number of initiatives that we're working on across the different buckets that Michael mentioned, so we hope to give more of an update shortly. Tenant retention, I think is something that Hongkong Land's very focused on and also very proud of. I threw out some stats earlier around some of our office tenants in Hong Kong having been with us for a very long time. I think for us, our strategy in the last few years has been to retain tenants. We've done that through being flexible on rental terms.
Our view has been that it's better to have a portfolio that's largely fully let so that we continue to enjoy cash flows. But importantly, it also means that when the market demand comes back, we're well placed to benefit, because in Hong Kong, office lease terms are generally fixed for three years and then they mark to market either through a rent review clause or through an expiry. All of our leases have that feature. So as rents hopefully trend up over time, then our rents will trend up over time overall. It's not easy though, everyone knows the broader market is very difficult, but in core Central Hong Kong, there are really limited options for people to move to. I think the ecosystem that Hongkong Land has, it's 12 connected buildings.
The fact it's adjacent or above some of the best retail in the world, the F&B, the connectivity to the MTR, the airport, these are things that really matter. The flight to quality trends that we've been talking about were really evident last year because we had a number of tenants move in from what I call fringe Central buildings into our portfolio. Not easy, as I said, but I think Hongkong Land's done a pretty good job there. On the retail side, you're right. As you walk around the Landmark, you're starting to see a lot more hoardings come up and this year will be the year with the biggest impact in terms of percentage of floor area out of operation temporarily. About 38% of total floor area on Landmark will be taken back at some point at its peak for renovation.
There is going to be an impact, and we've noted that there will be an impact on earnings this year as a result of that. But in terms of tenants' demand to be in the space, it's completely undiminished. 50% of the area is already committed through the long-term leases that the top 10 brands have signed up to as part of their store reimagination. So 50% done. The remaining 50% is in all in advance negotiations. To be honest, our retail footprint in Hong Kong is too small. We are really about 600,000 sq ft. We'd love to have more, so I don't worry about my occupancy levels in retail in Hong Kong at all.
I think the point Craig made as well, we're in early March, and 50% of our lease renewals have been done for this year. In a very, very early in the year, we've already covered, from a risk management perspective, a lot of our major expiries. We'll make sure the team focuses on the rest, and then we'll have the rest of the year to focus on our 7% vacancy. Unfortunately, a lot of that vacancy is spread through the 12 buildings. It's not in a contiguous manner. So, it's a continual battle to make sure that as our tenants grow, that we can accommodate them. One of our tenants moving to The Henderson because we just couldn't accommodate them in our portfolio, which was quite annoying. But all of that space is, I think, now being effectively recommitted by tenant expansion.
It's quite an interesting game that we have to play, but we've got a really good team, I think, best in class. We're managing all of these sort of risk positions that we're taking.
Hi, this is Karl Chan from JP Morgan. I have two questions. The first question is more like a follow-up on the Hong Kong office market. Just curious for 2025, in terms of the negative rental reversion, as we mentioned, that would be our outlook. But in terms of the magnitude, do you think that it could narrow a bit, in 2025? And in terms of occupancy rate, do you think there will be some improvement in 2025 as well? Then, just curious if you can also give us a bit more colors, on the recent inquiries in the office space. Say, in the past two months, do you see a pickup in inquiries from the new tenants? That's my first question. The second question is very simple. For DP in mainland China, do you think that we still need to do more impairment provision for this year? Thank you.
Maybe if I deal with that question first-
Sure.
-maybe we can pick up the office one.
Thank you.
I think, last year, we went through a big exercise to review our inventory in China. We did that in the middle of last year, and we came out of our half year results to say that we intended to impair some of the inventory. Obviously, impairment is really a function of market pricing. So really the question is: Do we anticipate a further deterioration in market for mainland China? I think the government has been doing a lot more around stimulus and really trying to stabilize the market. From my perspective, hopefully, we can start to see some of those policies take hold, that ultimately what it is consumer confidence, because, for people to want to buy residential units, they need to feel that the pricing is basically come to the bottom or at least be stable. I think the policies are important.
I also think the stock market being up is also a good thing because it helps with confidence overall. We certainly don't want impairments to be a regular feature of our results presentations, but ultimately, it's going to be driven by the overall market conditions. But as I said, most of our projects are very high quality in prime locations, and just like anything around in any real estate market around the world, quality well-located sells. We're blessed in that we only have a small number of projects that are probably in decentralized locations, and those are the ones that we've already written down.
Yeah. And just to supplement, I personally think that, continued fiscal stimulation of the domestic economy in China will continue. We saw in the first week of October in Golden Week when there was a stimulus package, our sales tripled from the week before in that week. It really is quite sensitive, and to Craig's point, it's not a crisis of capital, it's a crisis of confidence, right? And so as soon as people start feeling there's more confidence and more government support. The duality of further fiscal stimulus and potentially interest rates falling is a great sort of parallel. Hopefully, as Craig said, we've really taken a deep dive on all our projects. The ones that we have not provisioned have a healthy margin in place that still gives us the capacity to move prices as we need to in market without taking any impairment.
Hong Kong office. Crystal ball. I mean, maybe if I say a few words, Michael, you may want to chip in. I think in terms of inquiry levels, last year was quite quiet generally. I would say that we've seen a pickup in inquiries in the last few months, and I think inquiry levels have doubled in the last few months from where they were in the third quarter last year, coming from a low base, admittedly. But I think we are starting to see a lot more people make inquiries. Rental levels, too early to bake this for the full year, but we're starting to see some green shoots around stabilization. I think if we can see an uptick in inquiry levels, if people feel that this is rents are maybe starting to bottom out, it gives them the confidence to think about their office occupation needs.
The IPO market activity, and hopefully seeing that start to rise. I think we all know that the office market in Hong Kong can move very quickly in terms of sentiment. There is a lot of supply in the city, though, which is obviously going to take a long time to be absorbed. But I feel quite confident about our Central market. I think if you look at the vacancy or the amount of new supply in core Central, we have got a couple of new buildings that are still being let up. We have got a project just across the road that is in the process of being constructed, but that is it. Once those buildings are basically let up, it means that core Central landlords have fairly strong pricing power when the market demand comes back.
Like most markets globally, whether it is London or New York, there is a real desire to be in the heart of the city, best-in-class buildings, ecosystems, well-connected. So there is definitely going to be a continued divergence in rents between the best of the best and the grade B and below. So I think Hong Kong itself has probably got quite a lot of challenges to face into in terms of office in the city wide. But I think if you are in a very strong prime location and a good office portfolio, I personally feel quite confident about it generally.
Well, I think you covered it. Please.
Thank you management. This is Mark Leung from UBS. I have got a few questions. The first question is quite short. Number one is, whether will you consider listing in Hong Kong? Secondly is more back to the asset recycling again. I think Michael has touched about the $6 billion Development Properties, are going to be recycled. How about for the remaining $4 billion investment properties? How do you view asset spin-off through C-REITs or other REITs in maybe Hong Kong or in Singapore? The last question, the third question, is where do you see new investment opportunities coming from the integrated project? Last but not least is just more housekeeping. What is our sales margin for mainland China and going forward, the guidance? Thank you.
Okay. Plenty of questions there.
A lot of questions there.
You want me to-
You start with Hon Kong.
The Hong Kong listing. Just to remind everybody, our primary listing is in London, our secondary listing is in Singapore. Very consistent and the same as the Jardine group generally. Hongkong Land has Hong Kong in its name, so it's a natural question to ask. To be honest with you, it's something that's been reviewed at the board level a number of times. I think the coming back to Hong Kong to list is something that continues to be kept under review. But frankly, we feel that our current listing has served us well, continues to serve us well. What might change to be a catalyst to that? I think it's really going to be linked to China and how we see the equity flow through some of the Stock Connect programs.
At this juncture, based on the work that we've done, we don't feel that our share price performance has been adversely impacted by not being based in Hong Kong. So I wouldn't anticipate any change in the near term in that area overall. Just on the sales margin point, last year, 2024, our China build-to-sell residential margins were 25% pre-tax. Pretty healthy, actually. Which again, talks to the testament I was saying about, is testament to what I was saying about the high quality of the products or projects that we completed last year. But I acknowledge that, in terms of our remaining inventory, the profit margin ranges quite significantly from zero on projects that we've impaired, all the way through to projects in the 30s. So it's a bit of a mix.
Just in terms of the platform opportunities you mentioned, Mark, there's a lot of people around our executive management team now who really have a lot of experience around REITs and funds and things, but we're in no rush. We don't have to rush into anything. As I mentioned before, we have $2.5 billion of build-to-sell in China, another $1 billion of effectively build-to-sell outside of China. That because of our pivotal switch, we're not going to reinvest in any of that land. So as that product unwinds and is sold, that will come back to us. We can then de-gear or we could do buybacks that we've committed to. We could help fund our dividend, or we could go and find projects, either standalone or platform type projects that we can invest in.
We're quite fortunate that we're in a position that we're not just an IP company. If we were just an IP company saying that we were going to divest $4 billion-$6 billion in this market, it would be challenging. All of this product is already designed for sale, it will sell. We've got 25% margins, as we're saying. As it sells, and as long as we don't reinvest that money back into new land, which we don't intend to, that's the capital that will come back first. There are lots of other initiatives that we're thinking through and planning on, but that is sort of like a liquid recycling of capital that we obviously still need to focus on and think about, but that capital will come back.
Maybe if we take a couple of questions that have been posed online. First of all, from Nicholas Chen, from CreditSights, a few questions here. Can you provide the split between office rental and retail within Hongkong Land's total rental income? You'll have seen, there's a slide in the presentation today that breaks out our rental income by type and by country. I think this question is primarily about Hong Kong. Generally speaking, about 80% of our rental income in Hong Kong comes from office and 20% from retail. Generally speaking. He's also asking within retail rental, how much is contributed by the VIC segment. Again, in Hong Kong, the vast majority of our customer base are VIC in nature.
I guess you could say all of it comes from the VIC segment, but our rental income comprises a mixture of fixed base rent and turnover rent. About 15% of our rental income last year came from turnover, 85% was fixed. So in that sense, it's sort of stable in nature generally. Question two about the dividends and the fact that we increased it, and are we being too early with the increase and too aggressive? Obviously, as part of our strategy refresh, we've made a commitment to double dividends per share in 10 years' time. We're aiming to do that in a measured way. We feel that whilst our earnings may move up and down year to year, our strong balance sheet obviously speaks for itself. The fact that we're planning to recycle capital, which can also be used to fund dividend growth overall.
Also, I think just to clarify, a $0.0 1 cent increase is a cash cost of $22 million. The board was actually very happy to increase the dividend, and hopefully there'll be more increases to come in future years.
Just to supplement, we're going from a development business, which most developers have a lower payout ratio because they want to retain earnings to fund the acquisition of new land. We're going from that sort of more development focus to an investment sort of REIT-like focus. Our payout ratio can go up as we become more recurring income, and we don't necessarily then need to retain earnings. Going from where we were, 67% to 70%, giving guidance of 60%- 80%, there's still a lot of capacity there just on the payout ratio as we sell our DPs, as we have more recurring income to grow that payout ratio up further.
Then just, Nicholas had one other question around when should we expect the last of existing residential inventories in China to be fully disposed of? As Michael mentioned, there's about $2.7 billion of build-to-sell inventory in China that we have at the end of last year. I'm expecting about 80% of that to be liquidated in the next three years, just to give you a sense of our expectation on cash flow. One other question maybe from Joe Ho, Rondell Investments. Can you give some update on 2024 and 2025 retail sales performance in mainland China, especially WF Central? I think here, WF Central is a luxury-focused mall in Beijing. Our performance for the mall in the year, I think, beat the market overall because we're in the midst of repositioning some of our tenant mix.
The basement floor was redone at the end of 2023. We've also swapped out some of our Maison brands. For us, we've seen improved sales performance, but I think it is against a market backdrop that's down by about 20%- 30% for luxury goods in China. So I think the sort of more positive performance is really due to our own tenant positioning mix. I think the market remains pretty challenging. He's also asking about our views on organic rental growth in China. I think right now, obviously, the market is in a pretty difficult place, so we're not anticipating huge organic growth for 2025, generally. Any questions from the floor?
There's one from [Rachel] from Macquarie asking about the divestments that were undertaken in 2024, the $300 million of divestments, and will that result in 20% being used for buyback. As we've said, we've de-geared, we've increased our dividend. I think my personal preference is that when we do announce a buyback, it's meaningful. So we are working on a number of things to try and ensure that a buyback is implemented as per what we committed to last year. But after that $60 million on $300 million, which is 20%, $22 going to an increased dividend, the de-gearing that we've done, I think we'd prefer to get to a more meaningful position before we launch a buyback.
Joe from Rondell Investments got one follow-up question. What is net debt level if you include the net debt from joint ventures and associates? Hongkong Land's group net debt at the end of last year was $5.1 billion. Our share of net debt at joint ventures and associates is an additional $2 billion. Most of that $2 billion is in Singapore. That is because our One Raffles Quay and MBFC office portfolio, we own a one-third interest, so it is held in joint venture, which is why the debt is off the balance sheet. We have a modest amount of debt in our China portfolio.
Hi, hello, this is [Chris] from Crédit Agricole. I have two questions from perspective of bondholders. We are the credit investors of Hongkong Land. My first question would be, while today we hear a lot about your capital recycling strategy and share buybacks program commitment, what is the commitment that you can make to the bondholders to protect our interest? That is my first question. The second question is on the rating. Has the company communicated with the rating agency, and is there any commitment or any kind of a forecast that you can make to the rating agency so that we can keep our current rating?
Okay. I think they are good questions. If I-
Please.
-I take them. Our bonds are effectively issued and unsecured by the cash flows of the Hong Kong Central portfolio. Our business interests in mainland China and Singapore are obviously very important to Hongkong Land. But in terms of a bond fixed income investor, it is very much about what is happening in Hong Kong Central. Here, our investment in Tomorrow's CENTRAL is all about enhancing and protecting our cash flows in Hong Kong Central for the years and decades to come. From a fixed income point of view, hopefully that investment gives you a little bit of confidence in the group's own ambition to continue to ensure this portfolio remains resilient. Our debt levels that we have against the Hong Kong Central portfolio continue to be prudent. Therefore, the capital recycling initiatives that we are doing are generally in other markets outside of Hong Kong.
Hopefully you've seen on the slides the sort of Hong Kong rental income that we've had over the last five years. It has decreased, but I think it's been pretty resilient despite the broader market challenges overall. I think on the credit rating point, absolutely speak to the credit rating agencies on an ongoing basis. I mean, their feedback on our new strategy has been incredibly positive, and it's been positive for two key reasons. One, we're not planning to exit our Hong Kong portfolio, which is very stable. Two, we're recycling capital, which will ultimately see our net debt levels reduce. Despite, again, the broader market challenges, higher interest rates, they're quite positive and constructive on Hongkong Land because we're being proactive to manage our balance sheet for the current market environment.
That's great. No more questions, so we must have been transparent and clear. Of course, our objective. If there's nothing else, thank you very much for being here today. We really appreciate all your support and endorsement, and we look forward to meeting you again soon with more positive announcements. Thank you.
Thank you.