Hong Kong property developer New World expects housing market to feel the squeeze from rising interest rates

Housing market will gradually recover as there is still strong demand for homes, says CEO Adrian Cheng

Hong Kong-listed developer posts an 8.5 per cent increase in full-year profit to US$159.2 million

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A view of the 11 Skies project being constructed by New World Development close to the Hong Kong International Airport. Photo: Yik Yeung-man

Published: 7:42pm, 30 Sep 2022

Hong Kong’s housing market will be under pressure in the short-term from rising interest rates globally, the CEO of New World Development (NWD) said on Friday, after the property developer posted a modest 8.5 per cent rise in full-year profit.

“Such a turbulent market is stressful for everyone and we managed to record some gain in earnings,” Adrian Cheng Chi-kong, who is also the executive vice-chairman, said in an online briefing to discuss the results.

He said that property buyers in the city have adopted a wait-and-see attitude amid a tightening interest rate cycle globally. “Buyers need some time to digest, which will lead to downward pressure on Hong Kong’s property market in the short term.”

The company’s net profit for the year ended June 30, 2022, rose 8.5 per cent from a year ago to HK$1.05 billion (US$159.2 million), while underlying profit, excluding changes in the valuations of properties, rose 1.8 per cent to HK$7.08 billion. Revenue was flat at HK$68.2 billion.

Adrian Cheng Chi-kong, CEO and executive vice-chairman of New World Development. Photo: Handout

New World’s revenue generated from property sales plunged 23 per cent year on year, mainly dragged by a 80 per cent drop in contracted sales in Hong Kong.

Hong Kong’s housing market remains mired in a slump, reflecting the impact of higher interest rates and the city’s coronavirus restrictions. Home prices fell by 2.26 per cent in August to their lowest level in three and a half years and have retreated 6.5 per cent this year.