New World’s once-hot luxury development returns at a cut price

[HONG KONG] Hong Kong real estate company New World Development has finally returned to the market with a pair of luxury towers that were in hot demand during the boom years, until the firm was forced to knock them down and start again.

The company is selling the first batch of 88 flats in its Pavilia Farm III project at an average price of about HK$22,000 (S$3,579) per square foot from Saturday (Apr 18), it said in a recent filing.

The price is more than 4 per cent below the levels it asked for during a wildly popular sale five years ago, a sign that Hong Kong’s property recovery still has some way to go before the glory years return.

The developer, controlled by the family of billionaire Henry Cheng, said in July 2021 that it would demolish the two towers due to construction defects.

At the time, Hong Kong’s real estate market was near record highs and New World’s stock was around five times higher than it is today.

The towers’ return to the market looks set to offer a welcome source of relief for New World, which was pushed to the brink last year as it scrambled to win support for an US$11 billion loan refinancing. The company, just like the real estate market it operates in, is dramatically changed from the last time the project was on sale.

Representatives for New World did not respond to requests for comment.

The heavy cost of the rebuild may dent the returns New World can make from the project, even leaving aside the lower price.

Rebuilding and compensation payments added about HK$1.5 billion in additional costs for New World, according to Bloomberg Intelligence, although it remains unclear whether these are covered by insurance or other claims.

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But the project will give a boost to New World, which has found steadier ground this year after its eleventh-hour debt negotiations last June. The real estate company has been showcasing some units to potential buyers this month. MTR is the joint developer of the project.

“The project is crucial for New World to generate revenue to ease liquidity woes,” said Patrick Wong, senior analyst at Bloomberg Intelligence.

New World is also adjusting its sales strategy. Some of the larger, premium apartments are being offered via tender, a method that can help fetch higher prices. The project, built above a train station, has units from one to four bedrooms, with sizes ranging from about 300 square feet to more than 1,000 square feet.

While attractive pricing could support demand, higher costs remain a concern, analysts said.

Hong Kong’s residential market has shown signs of recovery after interest rates began easing last year and as mainland Chinese buyers returned. Home prices have risen about 8 per cent from lows of March 2025, but they remain well below the peak of September 2021.

“We expect New World to sell most properties of Pavilia Farm III within a year, with reasonable pricing enticing local buyers,” said Jeff Zhang, an analyst at Morningstar, who anticipates the project will generate more than HK$10 billion in sales proceeds.

“However, the contribution to earnings can be more limited due to demolition and reconstruction costs incurred previously,” he said.

About 95 per cent of the total 892 homes at Pavilia Farm III had been sold before the sales were halted in 2021, and buyers for roughly 500 apartments have since cancelled their transactions, according to property database EPRC.

Previous buyers were offered different compensation plans for either proceeding with or cancelling transactions, adding to costs for the developer just as the market turned. New World had initially expected only a nine-month delay in delivering the flats to buyers. BLOOMBERG