Hysan Development, the largest commercial landlord in Causeway Bay, expects retail rents to rise thanks to Hong Kong’s economic recovery and the consumption vouchers handed out by the government.

Sales and footfall in shopping centres have increased with the government’s distribution of HK$5,000 (US$642.56) consumption vouchers to each Hongkonger this month and the easing of Covid-19 cases, said Ricky Lui, chief operating officer at Hysan at a briefing on Wednesday.

“The stimulus from consumption vouchers has triggered some stabilisation effect [on the retail market]. Footfall, business and sales have risen,” Lui said. “Rent has hopefully found its bottom and will gradually rise as consumption rises.”

As for office rentals, Hysan will strive to retain tenants and recruit new ones as pressure persists in the sector, Lui said.

Rents for offices and homes fell in the first half, according to a filing to the Hong Kong stock exchange on Wednesday. But cases of retail rent reductions are becoming more scarce, Lui said.

Shopping centre rents in the second quarter of this year were down 10.2 per cent year on year and 45.2 per cent from a peak three years ago, according to Savills.

Hong Kong’s retail sales rose 8.4 per cent from a year earlier in the first half of 2021 as the local Covid-19 situation stabilised, with the government’s consumption voucher scheme expected to boost spending in the coming months.

Hysan, however, remained cautious as the global economic recovery remained “uncertain and uneven”.

“External forces, especially geopolitical tensions, social distancing and travel restrictions continued to adversely affect Hong Kong,” said Irene Lee, Hysan’s chairman, in the filing.

Despite the persistence of the Covid-19 pandemic, the company said its office portfolio had benefited from demand from “new economy tenants” in the first half of the year. Tenants within the fintech, co-working and wealth management sectors have been expanding and leasing more space.

In May, Hysan won a commercial site in Causeway Bay in a joint venture with Chinachem Group for HK$19.78 billion, about HK$6.45 billion more than the second-placed bid, according to the Lands Department.

“The Caroline Hill Road site has a special importance to us, especially when it comes to our company’s long-term development. It provides unique synergy to our existing Lee Gardens portfolio,” said Hysan’s spokesperson, when asked if the company had paid too much for the plot. “We believe it delivers a good long-term investment return.”

Hysan’s underlying profit dropped by 12.6 per cent to HK$1.18 billion in the six months ended June 30, according to the filing. Net profit stood at HK$517 million compared to a loss of HK$2.63 billion in the same period last year, mainly because of fair value changes of investment properties.

The board declared an unchanged interim dividend of 27 HK cents per share. The company’s share price dropped 0.9 per cent to close at HK$28.9 on Wednesday.