New World Development Company has reported a second consecutive annual loss, reflecting the severe pressures facing Hong Kong’s property sector. The prominent developer, 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 significant deepening of losses compared to the previous year’s HK$11.8 billion shortfall.
The company’s financial performance was heavily impacted by substantial one-time impairment charges and other losses. These results underscore a period of considerable turmoil for the firm as it navigates a persistent liquidity crunch amid a prolonged real estate downturn. Efforts to stabilize its financial position have included securing an US$11 billion refinancing package earlier in the year and a separate HK$3.95 billion loan facility.
Market conditions in New World’s core operating regions remain challenging. The residential markets in both Hong Kong and mainland China continue to experience significant weakness, with Hong Kong home values still down nearly 30% from their 2021 peak. Furthermore, the commercial property sector has seen dramatic price corrections, with office and retail space values declining 48% and 41% respectively from their 2018 highs, complicating the company’s asset disposal plans.
In response to these ongoing challenges, New World is actively pursuing additional financial support, including discussions with potential investors such as Blackstone Inc for a capital injection. The company’s difficulties have been compounded by internal changes, including the unexpected departure of heir Adrian Cheng last September. As one of Hong Kong’s major developers, New World’s struggles highlight the broader pressures within the region’s property industry.