HYSAN Development Co, the biggest landlord in Hong Kong's Causeway Bay commercial district, said yesterday that first-half underlying profit climbed 18 percent as it charged office and retail tenants higher rents.

Earnings excluding revaluation gains from investment property rose to HK$605 million (US$77.5 million), from HK$512 million a year earlier, Hysan said.

Net income more than doubled to HK$3.44 billion including gains from the revaluation of investment property, which almost quadrupled, Bloomberg News reported.

Hysan benefited from surging rents in Hong Kong's Central business district that drove financial companies and law firms to lower-rent districts such as Causeway Bay. The office vacancy rate in Causeway Bay fell to 1.79 percent in May from 2.09 percent three months earlier, according to property consultant Colliers International Ltd.

"We remain cautiously optimistic about the Hong Kong investment property market," Hysan Chairman Peter Lee said in a statement. Limited supply of prime offices in "core business districts and healthy employment conditions should further benefit our commercial property portfolio."

Hysan proposes to pay an interim dividend of 14 Hong Kong cents, up from 12 cents a year earlier.

Hysan shares have slid 1.8 percent this year, outpacing the 21-percent decline in the benchmark Hang Seng Index. The stock rose 0.7 percent to HK$21.85 at the 12:30pm trading break in Hong Kong yesterday, before earnings were announced. The shares closed at HK$21.60, down 0.46 percent.

The fair-value gains on investment properties rose to HK$3 billion in the first half from HK$795 million a year earlier. Including the gains, net income jumped to HK$3.31 a share, from HK$1.37 billion, or HK$1.30, a year earlier, the statement said.

First-half sales, or rental income, rose to HK$791 million from HK$663 million a year earlier.

Hysan owns office and retail complexes in Causeway Bay, and stakes in projects in Singapore.