Wharf REIC's Growth Underpinned by Strong Luxury Portfolio in Harbour City Mall

Wharf REIC's flagship properties are Harbour City and Times Square, which are well-known destinations for locals and tourists alike. Historically, the two properties collectively account for around 8%-10% of total retail sales in Hong Kong. As the company intends to hold Hong Kong investment properties exclusively, the China operation is being progressively scaled down. The Murray hotel was added to the Hong Kong portfolio in mid-2018, but given the corporate mandate and the current real estate environment, Wharf REIC is unlikely to make significant acquisitions in the near term, in our view. Its rental revenue growth is limited to reversion of the existing assets. While asset enhancement opportunities exist for Times Square, the biggest driver is the state of retail sales in Hong Kong.