New World faces risk of mounting losses amid Hong Kong property slump

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New CEO Huang has to grapple with looming losses on costly projects in a market downturn

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The New World Tower in Central. The developer is expected to sell two coming residential projects at a loss. Photo: Jelly Tse

Salina Li

Published: 7:30am, 9 Dec 2024Updated: 8:55am, 9 Dec 2024

Echo Huang Shaomei, the newly appointed CEO of heavily indebted New World Development (NWD), is facing a host of formidable challenges in the coming months: key among them, how the real estate giant can sell its costly projects without incurring significant losses.

Analysts predict that two of NWD’s major upcoming developments in North Point and Wong Chuk Hang will be loss-making, judging from their high land costs and the depressed pricing of recent projects.

The company, controlled by tycoon Henry Cheng Kar-shun, announced earlier this month the forthcoming sale of residential units at State Pavilia – the first phase of its redevelopment project at the former State Theatre site in North Point.

The proposed development has a total gross floor area of over 279,600 square feet, including a residential portion of around 133,400 sq ft, an office portion of around 75,200 sq ft, and a retail portion of around 47,000 sq ft, according to NWD’s annual report. Phase one, comprising 388 units, is slated to come on the market early next year.

Located in North Point along King’s Road, the former State Theatre site was fully acquired by NWD in 2020. Photo: Winson Wong

NWD had spent a significant sum to acquire the former cinema and two attached buildings.