Hong Kong’s property sector continues to face significant headwinds, as evidenced by New World Development Co’s latest financial results. The prominent developer reported a substantial loss for the second consecutive year, reflecting the broader challenges within the region’s real estate market. These difficulties stem from persistent debt issues and declining property values that have impacted many industry players.
The company recorded a loss of HK$16.3 billion from continuing operations for the year ending June 30, marking an increase from the previous year’s HK$11.8 billion deficit. This financial downturn was primarily driven by significant one-time impairment provisions and various operational losses. As one of Hong Kong’s four major developers, New World has been navigating through a period of considerable instability in both residential and commercial property markets.
To address its financial constraints, the company has pursued multiple financing strategies. Earlier this year, New World secured an US$11 billion refinancing arrangement, followed more recently by a separate HK$3.95 billion loan facility. The developer is also engaged in discussions with potential investors, including global firm Blackstone Inc, regarding possible capital injections to strengthen its financial position.
Market conditions remain challenging across New World’s operating regions. Hong Kong’s residential property values have declined approximately 30% from their 2021 peak, while mainland China’s housing market continues to struggle after more than four years of downturn. Commercial real estate has similarly suffered, with office and retail space prices falling 48% and 41% respectively from their 2018 highs, further complicating the company’s asset disposal plans.
The company’s operational challenges have been compounded by internal changes, including management transitions following the departure of heir Adrian Cheng in September 2024. As New World Development works to stabilize its financial situation, its ongoing struggles highlight the persistent difficulties facing Hong Kong’s property sector and the broader regional market dynamics.