Sun Hung Kai Properties underlying profit jumps on early project completions

(Adds sales, dividend, context on property market)

HONG KONG, Feb 27 (Reuters) - Hong Kong's most valuable developer Sun Hung Kai Properties Ltd reported a 37 percent rise in first-half underlying profit on Tuesday as most of its development projects for the year were completed in the first six months.

The company, which owns a portfolio of office space and residential flats in Hong Kong and mainland China, said underlying profit came to HK$19.97 billion ($2.55 billion) in the six months ended Dec. 31, compared with HK$14.6 billion a year earlier.

Underlying profit excludes the effect of fair value changes on investment properties.

The company declared an interim dividend of HK$1.20 per share for the reported period, a 9 percent increase from the year-earlier period.

"The group is facing a fast-changing operating environment amid recent developments in the new economy and keen competitions in both land and residential sales markets," chairman and managing director Raymond Kwok said in a filing to the Hong Kong Stock Exchange.

"Nonetheless... the group has taken a proactive approach to turn challenges into opportunities."

The company said total contracted sales edged up to HK$28.8 billion during the period from HK$28.6 billion in the same period a year earlier. Contracted sales for this financial year have hit about HK$35 billion so far, it added.

For Hong Kong alone, Sun Hung Kai Properties recorded HK$26.5 billion in contracted sales during the period, and set a medium-term annual property sales target of HK$40 billion.

Sun Hung Kai Properties' strong sales have been buoyed by Hong Kong's red-hot housing market which has seen average private home prices shattering records for over a year.

The city's de facto central bank has tried to rein in sky-rocketing home prices, imposing eight rounds of mortgage tightening measures since 2009.

But analysts say these measures, on top of the government's tax and regulatory policies, have effectively locked up supply in the second-hand housing market and further fuelled price rises. ($1 = 7.8263 Hong Kong dollars) (Reporting by Venus Wu Editing by Edwina Gibbs and Amrutha Gayathri)