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Cheng Family Bets on Hong Kong Property Rebound
20 Mar
Summary
- Cheng family explores deals with other investors to retain control.
- New World Development eyes a potential $4 billion share sale.
- Hong Kong property prices forecast to climb significantly this year.
The Cheng family is actively seeking new investment partnerships, engaging with firms like CapitaLand Group Pte and Ares Management Corp. This strategic shift follows a slowdown in discussions with Blackstone Inc., as the family prioritizes maintaining control over New World Development Co.
One of the primary options being explored is a substantial share sale, potentially valued around $4 billion. This move aims to address the developer's debt obligations and is supported by an optimistic outlook for Hong Kong's property market. Forecasts indicate a significant rise in housing prices and prime mall rents for 2026, which is expected to bolster New World's financial standing.
New World Development has accumulated substantial liabilities, totaling approximately HK$212.4 billion ($27.1 billion), largely due to expansion into projects that faced economic headwinds post-2019. Despite recent efforts like an $11 billion bank refinancing and asset-backed loans, the company continues to navigate liquidity challenges, with ongoing refinancing being crucial for near-term stability.
Recent financial maneuvers, including securing a $508 million loan against a key Hong Kong asset and a debt swap reducing liabilities by about $1.2 billion, have strengthened the company's position. These steps provide the Cheng family the confidence to await a more favorable property market before fully addressing debt repayment with sales proceeds.
