Why property giant New World’s debt woes have Hong Kong on edge

Bankers in Hong Kong are on edge as New World Development, one of the city’s top real estate developers, attempts to pull off an HK$87.5 billion (S$14.3 billion) refinancing deal by the end of the month.

Once among the most deep-pocketed property giants in the city, New World has faced mounting liquidity pressure over the past couple of years. Its net debt reached 96 per cent of shareholder equity at the end of 2024, according to Bloomberg Intelligence, making it one of the most leveraged developers in Hong Kong.

Investors are growing increasingly sceptical of the firm’s ability to manage its debt burden, after it reported its first loss in two decades in the 2024 financial year. Confidence was further eroded when New World opted to defer interest payments on some perpetual bonds to postpone its debt obligations. As of early June, the company’s shares had slumped more than 90 per cent from their peak in 2019.

If New World is unable to secure its multibillion-dollar loan deal, the fallout of its cash crunch could ripple across Hong Kong’s already beleaguered real estate market, which has been in the midst of a downturn for several years.