Why Hong Kong Land's 8.9% revenue drop is not cause for dismay

It's in line with analyst expectation.

According to Kaven Tsang, Moody's Vice President and Senior Analyst, "HKLH's stable rental income, mainly from its Central portfolio, and strong credit metrics continue to support its A3 issuer rating, despite a 8.9% year-on-year decline in revenue to USD1,115 million in 2012."

The decline in revenue is in line with Moody's expectation, due to a reduced level of completion for residential properties in 2012.

Here's more from Moody's:

Moody's expects the contribution from properties sales to pick up in coming two years, given the stronger pipeline of residential projects scheduled for completion, including three projects (including its one-third owned project Marina Bay Suites) in Singapore alone in 2013.

Increasing contract sales from China will also support the contributions from property sales in the next 2 years.

Though leasing activities for offices in Hong Kong softened in 2012 due to weaker demand from the financial services sector, HKLH's Central office portfolio continued to benefit from positive rental reversion.

Its office vacancy rate remained low at 3.4% (versus 2.0% in 2011) thanks to the limited new supply of Grade-A offices in the Central Business District of Hong Kong. Similarly, its retail portfolio remained fully let.

This limited supply situation will support the Central portfolio's rental and occupancy rates in the near-to-medium term.

HKLH's Singapore portfolio also demonstrated a favorable performance, despite slower office leasing activity and competition from new office buildings.