New World Development, a prominent Hong Kong property firm, has reported its second consecutive annual loss, reflecting the severe pressures within the regional real estate sector. The company, controlled by the billionaire Cheng family, announced a loss of HK$16.3 billion from continuing operations for the fiscal year ending June 30. This figure represents a deepening deficit compared to the previous year’s HK$11.8 billion loss, primarily driven by substantial one-time impairment charges.
The developer has been actively navigating a liquidity crunch amid the prolonged property downturn. Earlier this year, it secured an US$11 billion refinancing arrangement, and this week it obtained an additional HK$3.95 billion loan, though this amount was significantly below its initial target. The company is also reportedly in discussions with potential investors, including the global investment firm Blackstone Inc, for a capital infusion to strengthen its financial position.
Persistent weakness in both the residential and commercial property markets continues to hamper recovery efforts. Home values in Hong Kong remain nearly 30% below their 2021 peak, while the broader mainland Chinese housing market shows no signs of a near-term rebound. Furthermore, the value of the company’s commercial assets has been suppressed, with office and retail space prices down 48% and 41%, respectively, from their 2018 highs, complicating efforts to raise cash through asset sales.
As one of Hong Kong’s major developers, New World has encountered a series of operational and leadership challenges over the past year. These include mounting debt obligations and significant management changes, notably following the unexpected departure of heir Adrian Cheng. The company’s ongoing financial struggles underscore the difficult environment facing the region’s property industry, with a clear path to recovery still uncertain.