The Causeway Bay site occupies one of Hong Kong’s most valuable retail locations (Getty Images)
Cash-strapped New World Development has deferred an opportunity to secure the final piece in one of the largest redevelopment opportunities in Hong Kong’s Causeway Bay commercial hub after failing to show up for a court-ordered property auction on Thursday.
The auction requested by New World, would have capped a 13-year effort by the developer to consolidate a site which could yield a 297,000 square foot (27,600 square metre) commercial tower in one of Hong Kong’s most sought after retail locations.
With New World having been rushing to sell assets as the developer faced total debt of which reached HK$144.3 billion ($18.4 billion) as of 31 December, some analysts see the company potentially parting with its more than 80 percent ownership of the Causeway Bay site.
“It cannot be ruled out that the major stakeholder of the property may consider to sell out the project to a third party if they don’t have the immediate plan for redevelopment,” Vincent Cheung, managing director of Vincorn Consulting and Appraisal Limited told Mingtiandi.
New World had not responded to inquiries from Mingtiandi regarding the auction by the time of publication.
Sliding Valuations
New World had first applied in 2022 to force the owners of the remaining space in three adjoining properties at the intersection of Percival Street, Russell Street and Lee Garden Road in Causeway Bay to sell their holdings, after having acquired more than 80 percent of the area in the properties.
New World chairman Henry Cheng is not in a buying mood (Getty Images)
The city’s Lands Tribunal approved the application in August and set a reserve price of HK$2.8 billion for the auction – down from a valuation of HK$4.5 billion for the properties at the time that the application was filed.
With the auction having originally been slated for October last year, New World had succeeded in deferring that schedule until last week with the reserve price also having been adjusted downward to HK$2.7 billion.
Even at the adjusted price point, New World’s no-show at the auction makes it the largest failure of a compulsory sale in the city’s history, according to analysts, and only the sixth failed forced auction ever.
Retail Bargains Wanted
Some analysts attribute New World’s withdrawal from the compulsory sale to the price which the transaction set for the remaining units in the property, which are mostly ground-floor retail units, with the developer potentially eyeing an adjusted valuation through a later application.
With New World primarily holding upper floor residential units in the property while the minority owners targetted in the forced sale hold lower floor retail space, the sale order specified that approximately 43.8 percent of the auction proceeds would go to the minority owners, despite their titles representing less than 20 percent of the properties’ total gross floor area, according to CHFT Advisory and Appraisal.
“Because the retail market has been declining while the residential market is recovering, the minority owners’ existing use value (predominantly ground-floor retail units) as a fraction of total EUV could decrease in a future application, while New World Development’s share of EUV (predominantly upper-floor residential) rises,” said Bobby Mak, real estate valuer at CHFT Advisory and Appraisal.
Liquidity Challenges
New World has given up on the Causeway Bay asset auction opportunity as the developer controlled by the billionaire Cheng family continues to face liquidity challenges after only narrowly escaping default last year following a record $11.3 billion bank refinancing.
New World saw its revenue for the six months ended 31 December 2025 halve to HK$8.391 billion amid weakness in its mainland China, according to interim results released last month. The company recorded an attributable loss of HK$3.73 billion for the period, due to write-offs on its assets.
The Cheng family which controls New World was said late last year to have been in talks to sell a stake in the developer to US fund manager Blackstone for $2.5 billion. Bloomberg reported last month that those talks have dissolved without an agreement, with New World said to now be hoping for Hong Kong’s housing market revival to support its business.
