HONG KONG (Reuters) ? Bermuda-registered Hongkong Land Holdings posted a better-than-expected 24 percent rise in first-half profit on Tuesday as strong residential sales and a surge in the value of its property portfolio offset lower office rentals.

The group, the dominant landlord in Hong Kong?s Central business district, said the city?s office market was recovering slowly, but rents were lagging.

Hongkong Land is a unit of one of Asia?s oldest trading groups, Jardine Matheson Group.

Sister retail firm Dairy Farm International Ltd., said first-half underlying profit rose 48 percent and said its second-half outlook was ?broadly positive.?

Luxury hotel group Mandarin Oriental International Ltd., also part of the Jardine group, returned to profitability in the first half after last year?s SARS virus devastated the travel business.

Prime office values in Hong Kong?s Central district, where Hongkong Land owns key commercial properties such as Exchange Square and the Landmark, have risen by roughly 40 percent since the start of the year thanks to a recovering local economy.

?Provided the global economy remains on its present, positive path, rents should continue to firm in Hong Kong, supporting the recent rise in values of the investment property portfolio,? Hongkong Land Chairman Simon Keswick said in a statement.

Hongkong Land?s underlying profit attributable to shareholders totalled US$104 million in the first half, compared with $84 million in the same period of 2003. Analysts had forecast an underlying net profit of $76.8 million, according to the average of three brokerages polled by Reuters.

The value of Hongkong Land?s investment property portfolio rose 15 percent from the end of 2003 to $810 million as Hong Kong property prices rose. Its vacancy rate is now 6.2 percent, compared with about 10 percent early in the year.

Analysts are forecasting an upcoming supply crunch for top grade office space, with few new buildings coming on the market to meet rising demand from banks, law firms and trading houses.

Hongkong Land shares have risen eight percent this year and were unchanged on Tuesday before the results release at S$1.84.

Dairy Farm, which operates retail chains in Asia under various brands including Wellcome, 7-Eleven and Ikea, said its underlying first-half net profit rose 40 percent to $62 million, thanks in part to an improving economy in Hong Kong. An exceptional gain of $23 million from asset sales pushed its net profit to $85 million.

Turnover rose 16 percent to $2.5 billion.

Hong Kong-based Mandarin Oriental International Ltd. said its net profit totalled $5.6 million compared with a loss of $10.7 million from a year earlier.

The first-half results included $7.3 million of pre-opening costs and initial operating losses related to the group?s newly opened hotel in Washington, D.C.

?The recovery seen during the first half has been encouraging and continuing growth in travel should help the traditionally stronger second half of the year,? said Keswick, who is also chairman of Mandarin Oriental.