K11 Musea, an opulent art-and-luxury-retail galleria in Hong Kong, has attracted attention for its lavishness even in a city known for its big-money projects. The brainchild of Adrian Cheng, heir to one of Hong Kong’s wealthiest families, K11 Musea took 10 years and $2.6 billion to materialize on prime harbor-front property that had been passed down through three generations of his family.
However, Cheng’s ambitious vision for K11 Musea and for himself has suffered a dramatic blow. The 44-year-old CEO of New World Development Co, a key player in Asia’s business dynasties, has abruptly resigned, shocking the upper-class of Hong Kong. In his place, a non-family member, the company’s chief operating officer, has taken over. The news caused New World’s stock to surge by 17% on Friday.
The move has left many New World employees stunned, as the Cheng family rarely hands over control to outsiders. Behind the scenes, Cheng’s father, 77-year-old Henry Cheng, has stepped in to take a more active role in the family’s empire, including New World. He has also assigned key responsibilities to his daughter, Sonia, and two other sons, Brian and Christopher.
This turn of events exposes the impact of Hong Kong’s weakening real estate market on the city’s economy and the billionaires who call it home. The Cheng family, with a net worth of $22.6 billion, is determined to break the Chinese saying that “wealth doesn’t pass three generations.”
Adrian Cheng, a Harvard-educated art enthusiast, struggled to live up to the business successes of his late grandfather, Cheng Yu-Tung, and his father, Henry Cheng. The elder Cheng, a former gold shop apprentice, built an empire and passed it on to his son, who initially drove it into debt. However, father and son worked together to turn things around, making the Cheng family one of the wealthiest in Asia.
But since Adrian Cheng took over as CEO in 2020, New World has encountered significant financial challenges. The company’s debt-to-equity ratio has risen to over 80%, the highest among Hong Kong’s major property developers, according to Bloomberg Intelligence. It also reported a net loss of $2.5 billion in 2023, the first in two decades.
Experts say that third-generation successors of family empires often face immense pressure, especially in tough economic times, high expectations from family members, and intense scrutiny from the business world. As New World struggled financially, family members became concerned that Adrian Cheng was too focused on cultural pursuits, such as K11 Musea, which may have contributed to his resignation. In a 2020 television interview, Henry Cheng stated that he was still searching for a successor, despite Adrian having held the CEO position for several years.
Investing in real estate is a strategic decision, and one of the key aspects that potential buyers should consider is the location. This is especially true for properties in Singapore, where the location can greatly impact the value of a condo. Choosing a condo situated in a central area or close to important amenities, such as schools, shopping malls, and public transportation hubs, can lead to higher appreciation in value over time. Some of the most sought-after locations in Singapore include Orchard Road, Marina Bay, and the Central Business District (CBD), where property values have consistently shown growth. Additionally, condos near reputable schools and educational institutions are highly desirable for families, further increasing their investment potential. For those looking to invest in Singapore, Singapore Condo is a great option to consider.
Representatives for Chow Tai Fook Enterprises Ltd, Henry Cheng’s private investment vehicle, Adrian Cheng, and New World did not respond to requests for comment.