Yuen Long’s wide open spaces convinced CK Asset to purchase a site at Lau Yip Street and Chung Yip Road in 2021
New World Development has teamed with state-controlled China Resources Land on a residential joint venture worth a reported HK$10 billion ($1.28 billion), giving the debt-laden Hong Kong builder a chance to raise cash from farmland it owns in the New Territories.
Under the agreement made public Wednesday, NWD and China Resources Land will jointly develop a project to create 1,800 homes in Hong Kong’s much-ballyhooed Northern Metropolis scheme, with construction to commence in 2024. The South China Morning Post first reported the deal’s HK$10 billion value, citing sources familiar with the matter.
The announcement comes after NWD in the last few months bought back seven of its US dollar bonds and sold its majority stake in the group’s construction arm to the controlling Cheng family in a bid to reduce leverage.
“In addition to unlocking agricultural land value and creating the greatest return for our shareholders, this project also highlights our commitment to supporting both the nation’s development plan and the vision of the Northern Metropolis,” said NWD CEO Adrian Cheng. “We look forward to contributing to the development of a new core business district in Hong Kong.”
Yuen Long Landmark
The two companies laid out a framework for co-development of two sites in the “high-end professional services and logistics hub” zone of the western New Territories’ Yuen Long South area. The residential project’s site measures 150,000 square feet (13,935 square metres) and will yield a buildable gross floor area of 720,000 square feet.
Henry Cheng, chairman of New World Development
Billed as the first project of the government’s Northern Metropolis initiative, the development is roughly six minutes by car to Long Ping MTR station on the Tuen Ma line and within a 30-minute commute of Hong Kong Island, Kowloon and Shenzhen, the companies said.
The project has its origins in a strategic partnership agreement signed by NWD and China Resources Land in October of last year with a focus on Hong Kong, Macau and Guangdong. The real estate unit of state-owned conglomerate China Resources also inked pacts with local heavyweights Henderson Land Development, K Wah International Holdings and Shun Tak Holdings.
Chairman Li Xin said Wednesday that China Resources Land hoped to leverage both parties’ rich resources and experience in developing high-end and high-quality projects.
“We are committed to contributing to Hong Kong’s economic development and improvement of people’s livelihoods, as well as to supporting the country’s overall development,” Li said.
Righting the Ship
Shareholders of NWS holdings, the infrastructure and construction business of NWD and Chow Tai Fook chairman Henry Cheng, last month approved an offer by the Cheng family to take NWS private in a HK$35.5 billion ($4.5 billion) buyout.
The deal saw the Chengs acquire the 60.85 percent of NWS shares they did not already own, including a majority stake held by NWD, which is set to receive HK$21.8 billion in proceeds from the disposal.
As part of a broader management shuffle, NWS this month appointed Henry Cheng’s second eldest son, Brian Cheng, as co-CEO, with the 41-year-old sharing the chief executive role with Gilbert Ho, currently NWS’s chief operating officer.
Just days before the family’s share buyback, NWD completed a tender offer for $610 million worth of the company’s bonds in an effort to further slash its debt burden.