Swire optimistic on office demand continuing into 2H15

It's also confident about China retail properties.

Swire Properties reported in line 1H results, with underlying net profit increasing 4% y/y and interim DPS also raised by 4%.

According to a research note from Barclays, further, despite the recent stock market volatility, Swire expects the pick-up in office demand to continue into the 2H.

In addition, Swire was also upbeat on its China retail properties and Guangzhou office.

Given the recent stock market volatility, the outlook of the office market was one of the key focuses. Similar to other landlords that have reported, Swire also affirmed a positive office outlook.

Further, Swire was also positive on its China retail properties and Guangzhou office. On the flipside, its outlook was more cautious for Hong Kong retail, Beijing office and also for the hotels division.

Here's more from Barclays:

With Hong Kong office and China retail making up 55% and 12% of Swire's NAV respectively, we believe Swire should be relatively insulated from Hong Kong's retail weakness.

Revaluation turned positive, BVPS up 2.8% h/h: After posting a HK$401mn revaluation loss in 2H 2014, Swire's revaluation turned positive in 1H.

Management attributed the higher office rents in Island East and Taikoo Hui as contributing factors. Helped by the HK$4,458mn revaluation gain, Swire's BVPS increased by 2.8% h/h to HK$36.50.

Downside risks include: 1) Further slowdown in Hong Kong retail sales, 2) rate hike impact on Hong Kong's luxury market.