HONG KONG (Bloomberg) ? Hongkong Land Holdings Ltd., one of the city's largest business-district property owners, said first-half profit rose 11 percent on higher office rents and helped by contributions from its Singapore unit MCL Land.

Profit, excluding property revaluations, rose to $117 million, or 5.26 cents a share, from $105 million, or 4.74 cents a share, a year earlier, the company said in a statement last week. Net financing costs rose to $37.4 million from $11.5 million a year earlier and net asset value per share increased to $3.60 per share from $3.24.

Office rents in Hong Kong's Central district, where Bermuda-registered Hongkong Land owns 5 million square feet of space, are at their highest for 12 years after rising 18 percent in the first half, according to property adviser Savills Plc. Banks such as ABN Amro Holding NV and UBS AG are expanding in Hong Kong to tap the private banking and corporate finance needs of China, the world's fastest-growing major economy.

"The outlook is positive," said Jeff Yau, an analyst at DBS Vickers Hong Kong Ltd. "First, because of the continued rising rentals. Second, the company has new rental projects in Singapore and Hong Kong."

Residential profits for the group jumped to $17.6 million from $7.5 million, the company said. Profits from commercial property rose to $159 million from $127 million. Hongkong Land also booked negative goodwill on its purchase of MCL Land earlier this year ?- reflecting a higher share value compared with its acquisition costs.

Hongkong Land acquired its 77 percent in MCL by mid- February for $307 million. Hongkong Land already owned 9.5 percent.

The company expects earnings to increase next year, Hongkong Land chairman Simon Keswick said in the statement.

"Although rental increases in Hong Kong's commercial market are slowing, the outlook continues to be underpinned by the lack of supply in Central," Keswick said. "The continuing positive reversion cycle and our pipeline of development sites will produce further improvements in earnings next year."

There's a shortage of new city-center top quality office space scheduled for completion before the end of 2008, according to Savills. The vacancy rate has fallen to five percent, with the rate for the highest-quality buildings dropping to twopercent, Savills figures show.

About 81 percent of Hongkong Land's assets are in Hong Kong and Macau, Finance Director Geoffrey Brown said. Twelve percent are in Southeast Asia and one percent is in mainland China.

The company said it expects that Hong Kong will remain its main driver over the next few years, but contributions from China and Southeast Asia will rise as the company build up its business.

The company declared a dividend of 3 cents, compared with 2 cents from last year. Hongkong Land is based in Hong Kong, incorporated in Bermuda and traded in Singapore in US dollars. It is controlled by Jardine Strategic Holdings, a Hong Kong-based investment company.