New World Development (NWD) has priced its latest Hong Kong residential project, State Pavilia, at a significant discount as the developer works to address its HK$123.7 billion (US$15.9 billion) debt burden. The company, controlled by tycoon Henry Cheng Kar-shun’s family, set the price for the first 88 units at an average of HK$18,540 per square foot, marking the lowest pricing in the city’s Eastern district in eight years.
The first phase of the redevelopment project, located at the former State Theatre site in North Point, comes at a price point notably below market expectations. By comparison, Sun Hung Kai Properties priced its Lime Gala project in 2016 at an average of HK$17,732 per square foot. Analysts estimated that the project’s accommodation value—calculated from land acquisition costs and permitted gross floor area—stood at HK$21,500 per square foot, meaning NWD priced the units about 13% lower than that benchmark.
The redevelopment’s total land cost was approximately HK$6 billion, with estimated construction expenses adding another HK$1.5 billion before interest. NWD, one of Hong Kong’s most highly leveraged developers, reported a net gearing ratio of 55% in 2024, alongside interest-bearing loans and bonds totaling HK$151.6 billion.
Of the 88 units available in the 388-unit first phase, 25 are one-bedroom apartments, 62 are two-bedroom units, and one is a three-bedroom flat. Sizes range from 343 to 726 square feet, with prices starting at HK$6.05 million and reaching up to HK$19.59 million.
Some analysts had anticipated higher pricing for the project. CHFT Advisory’s Alex Leung initially projected an average price of HK$23,000 per square foot, considering that NWD had previously sold premium high-floor units with harbor views and parking spaces at higher rates through tender.
However, the pricing strategy reflects the developer’s urgent need for liquidity. Morningstar analyst Jeff Zhang noted that NWD’s financial pressures likely influenced the decision to price below expectations, calling it a bargain in the North Point area.
State Pavilia’s average price is also 11% lower than Wang On Properties’ nearby development, 101 King’s Road, which launched in November at HK$20,800 per square foot. Zhang believes that while the project may generate short-term cash flow, it will have a limited impact on NWD’s overall financial position, given the scale of its debt obligations.
He also pointed out that NWD’s property development profit margins are expected to decline as newer projects continue to yield lower returns, further complicating the company’s financial recovery efforts.
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