Hong Kong developer New World Development to invest US$2.5b in Skycity airport retail complex
The group’s subsidiary Roxy will undertake the project set on 25 hectares of land and will complete it in phases between 2023 and 2027
New World Development plans to invest HK$20 billion (US$2.55 billion) in Skycity, a commercial entertainment project attached to the Hong Kong International Airport, the company said in a stock exchange announcement on Wednesday.
New World Development’s subsidiary Roxy, which won the tender, will enter into an agreement with the Airport Authority by May 30 and is expected to complete the project in phases starting from 2023 to 2027.
The developer will build a 350,000 sq metre retail complex that will also connect to the Hong Kong-Zhuhai-Macau bridge.
Skycity, which covers about 25 hectares of land, will be the largest retail complex in Hong Kong, the Hong Kong International Airport has claimed on its website.
“With [Skycity] becoming one of the largest commercial complexes and a landmark in Hong Kong, and the huge demand brought about by both local residents and visitors, it is expected that [Skycity] will bring a strong recurrent income to the group,” New World Development said.
New World Development said the group will fund the development with internal resources and may also seek external debt.
The complex will comprise retail, dining and entertainment facilities, transport terminals, and at least 2,800 car parking spaces. It may also include offices.
Under the terms of the lease, Roxy will pay a guaranteed rent, or 20 per cent of gross revenue derived from operating and managing the complex, whichever is higher.
In a separate press release, New World Development said that the development will offer entertainment such as Hong Kong’s first indoor and outdoor go-kart circuit, augmented reality and virtual reality interactive games.
The Airport Authority, which is the government’s wholly-owned statutory body responsible for the operation and development of the city’s airport, announced the Skycity project in October 2016.
The airport’s passenger traffic is expected to rise to over 100 million passengers per year by 2030, from over 70 million served in 2016.
Following the completion of the Hong Kong-Zhuhai-Macau bridge, which is expected to be open to traffic over the course of this year, New World Development said it expects Skycity to become a popular destination for visitors from the Greater Bay Area.
The Greater Bay Area links the cities of Hong Kong, Macau, Guangzhou, Shenzhen, Zhuhai, Foshan, Zhongshan, Dongguan, Huizhou, Jiangmen and Zhaoqing into an integrated economic and business hub.
Thomas Lam, senior director at real estate consultancy Knight Frank, said because of the size of the investment and New World Development’s revenue-sharing arrangement with the Airport Authority, it would take about 10-15 years for the company to recoup its investment.