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Hong Kong Developer Rebuilds Defective Towers
17 Apr
Summary
- New World Development is selling luxury flats at a lower price than five years ago.
- Two towers were demolished due to construction defects in 2021.
- Rebuilding costs added HK$1.5 billion to the project expenses.
New World Development has returned to the market with its Pavilia Farm III luxury towers, five years after an initial sale. The company is now selling 88 flats at an average price of HK$22,000 per square foot. This price point is more than 4% below what was asked during the project's first offering.
In July 2021, New World Development announced the demolition of the two towers due to construction defects. At that time, Hong Kong's property market was near record highs. The decision to rebuild incurred significant costs, with an estimated HK$1.5 billion added for reconstruction and compensation.
The relaunched project is crucial for New World's revenue and liquidity, following challenging debt refinancing efforts last year. Analysts suggest that while attractive pricing may drive sales, higher reconstruction costs will likely temper the project's contribution to earnings. Approximately 500 buyers from the original sale have canceled their transactions.
The project, developed in partnership with MTR Corp., features units ranging from about 300 to over 1,000 square feet. Hong Kong's residential market has seen recovery signs, with home prices rising about 8% from their March 2025 lows, yet still below their September 2021 peak.
