Profit fell 47 percent year-on-year to HK$3.17 billion (US$407 million), representing a fair value loss of HK$2.26 billion after the revaluation of the group’s investment properties, Henderson said in a filing to the Hong Kong Stock Exchange after the close of trading on Wednesday. The fair value loss in the year-ago period was HK$116 million.

“Interest rates are expected to be adjusted downward in the second half of this year, which bodes well for the overall economy as well as the property market in Hong Kong,” said Peter Lee Ka-kit and Martin Lee Ka-shing, chief executives of Henderson, in one of the documents.

Initiatives to link Hong Kong’s capital markets and mainland China, as well as the listing of leading mainland Chinese companies in the city, “will strengthen Hong Kong’s status as an international financial centre in the long term,” they added.

The company joins a club of comparable developers and landlords who presented disappointing results in the first half of the year.

As of June, Henderson had a land reserve in Hong Kong with a total gross floor area of ​​approximately 23.5 million square feet, including 1.1 million square feet of projects under development.

In the residential sector, around 4,600 units are expected to be for sale in Hong Kong in the second half of the year, according to Henderson.

The developer proposed a dividend of HK$0.50, the same as in the first half of 2023.

Henderson Investment, the subsidiary that operates several department stores in Hong Kong, said it lost HK$69 million in the first half of the year, almost four times the HK$18 million loss in the same period in 2023.

In addition to an increase in outbound tourism and cross-border consumption by Hong Kong residents, the lack of consumption vouchers has further hampered retail this year, the company said.

“Looking ahead, the business environment in Hong Kong’s retail sector is expected to remain challenging,” said Martin Lee, Chairman of Henderson Investment. “The Group is conducting a thorough review of the performance of its stores. This exercise aims to streamline the Group’s store network and optimise the use of its resources to improve business performance and increase operational efficiency.”

The group’s retail activities are carried out by Citistore, which has five department stores and two homeware stores, and Unicorn, which has two department store-cum-supermarkets and two standalone supermarkets. Brand names include Citistore, Citilife, Apita and Uny.

According to a preliminary estimate by the Bureau of Statistics, retail sales in Hong Kong fell 9.7 percent year-on-year to HK$29.9 billion in June. In the first six months of the year, total retail sales fell 6.6 percent year-on-year.