Under Adrian Cheng’s leadership New World has begun using the K11 brand on its commercial projects
Adrian Cheng, heir to a $20.7 billion family fortune, has been named as executive chairman of Hong Kong-listed property group New World Development’s mainland China arm.
New World’s wholly owned subsidiary, New World China Land, said in an announcement that Cheng, whose 73-year-old father Henry Cheng is the property group’s chairman as well as being Hong Kong’s third richest man, will “lead the company to embark on a new chapter” as it continues to expand its presence in Greater China.
The appointment comes three years after the younger Cheng took on the role of executive vice-chairman and general manager of New World Development, reinforcing his role as second-in-command of the property group, which has assets of HK$503 billion ($65 billion) across Hong Kong and mainland China.
The group said that Adrian Cheng would continue in his position as New World Development’s executive vice-chairman following the appointment.
Inheriting the Family Business
The 40-year-old Ivy League-educated scion is the eldest grandchild of Cheng Yu-tung, who founded both New World Development and jewellery business Chow Tai Fook.
Cheng’s rise through the ranks of the family business began in 2006 when he set about an overhaul of the group’s department stores, replacing supermarkets with luxury shops such as Dior and Burberry. His retail innovations resulted in sales growth at the store chain falling by nearly 70 percent before the 2008 financial crash.
Adrian Cheng is taking the reins of New World’s China business
Since then the group’s new China boss has masterminded the introduction of New World’s K11 retail property brand in Hong Kong and China, repositioning a number of the company’s shopping centre assets as art-driven cultural destinations. New World’s K11 properties now average 20 percent vacancy.
Cheng completed a bachelor’s degree in East Asian studies at Harvard after his father founded the university’s New World Harvard Kennedy School Fellows Programme, before going on to work in investment banking for a brief period including stints at UBS and Goldman Sachs.
Ramping up Investment in China
Cheng, who is also an executive director of Chow Tai Fook, is taking control of New World’s China business at a time when developers across Greater China are seeing sales dip.
During 2019 New World Group posted a 20 percent drop in profit after tax across Hong Kong and mainland China compared with the previous twelve months.
Figures for New World’s mainland property development business have been rosier than the overall group picture, with New World China notching a gross profit margin of 46 percent for the twelve months to 30 June 2019.
“We are steadily increasing investment in the mainland Chinese market at a pace in line with local regulations,” Cheng said in a statement. “In first-tier or promising cities, we serve as a city operator to create unique and inspiring landmarks.”
In terms of revenue, China amounted to just under half of the company’s Hong Kong receipts of HK$50.7 billion for the twelve months up to the end of June 2019, bringing in HK$24.9 billion to the company coffers.
Driving the China Business Forward
Cheng will be steering New World China through one of the most challenging periods for Hong Kong developers since the SARS crisis in 2003.
Even before the property market stalled as a result of the CORVID-19 outbreak, six months of pro-democracy protests in Hong Kong have pushed real estate values down in the Asian financial hub.
Property tycoons have also faced criticism for benefiting from sky-high housing prices in Hong Kong while normal people struggle to afford a place to live.
In response to this bad press, Adrian Cheng pledged five months ago to donate farmland valued at HK$3.37 billion, equivalent to 16 percent of New World’s agricultural land bank, to help alleviate the housing crisis. The company said that it would initially transfer one million square feet of land to a social housing organisation for the token sum of HK$1.
Mingtiandi sources revealed at the time that the organisation, Light Be (Social Realty), had worked with New World Development since 2016 and had links to the family of convicted fugitive Joseph Lau as well as political figures connected to Carrie Lam.
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