Hong Kong’s NWD prices State Pavilia residential project in North Point at huge discount

Hong Kong developer, struggling with US$16 billion in debt, prices 88 units at HK$18,540 per square foot on average, an eight-year low for the area

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New World’s State Pavilia residential project is coming up on the site of the former State Theatre in North Point. Photo: Jelly Tse

Published: 7:01pm, 6 Feb 2025Updated: 7:57pm, 6 Feb 2025

New World Development (NWD) on Thursday priced its latest Hong Kong residential project at a substantial discount, as the embattled developer scrambles to generate cash to whittle down HK$123.7 billion (US$15.9 billion) in debt.

The company, controlled by the family of tycoon Henry Cheng Kar-shun, priced the first 88 units in State Pavilia – the first phase of its redevelopment project at the site of the former State Theatre in North Point – at an average of HK$18,540 per square foot. The project has been priced at an eight-year low in the Eastern district, according to Centaline Property Agency.

Sun Hung Kai Properties priced the first batch of flats in its Lime Gala project in August 2016 at an average of HK$17,732 per square foot.

The price was about 13 per cent lower than its accommodation value of about HK$21,500, according to Alex Leung, a senior director at CHFT Advisory and Appraisal. The accommodation value – the land acquisition cost divided by the gross floor area permitted for the project – in this case was about HK$6 billion and 279,600 sq ft, he said.

Additionally, the construction cost could amount to another HK$1.5 billion before interest, he added.

New World Tower in Central. New World Development has HK$123.7 billion in consolidated net debt. Photo: Jelly Tse

The Hong Kong-listed company is one of the most indebted developers in the city, with HK$123.7 billion in consolidated net debt as of June 2024, according to its annual report. NWD has one of the highest net gearing, or debt-to-equity ratios, at 55 per cent. It also held interest-bearing loans and bonds amounting to HK$151.6 billion.