Hong Kong Billionaire Cheng Family’s Scion Adrian Steps Down As CEO Of New World Development
by Zinnia Lee · ForbesAdrian Cheng, the third-generation scion of Hong Kong’s billionaire Cheng family, said on Thursday he had stepped down as CEO of the family’s flagship New World Development, after the property company recorded its first annual loss in two decades as it grappled with mounting debt levels.
Effective immediately, Adrian was replaced by the company’s COO, Eric Ma Siu-Cheung, four years after the scion took the helm, New World said in a filing to the Hong Kong stock exchange. The eldest son of New World chairman Henry, Adrian will remain on the board of New World.
In a press conference on Thursday, Adrian said he had resigned to focus on public services. “After much deep consideration, I have decided to devote more time to public services in the next stage of my life, to make greater contributions to Hong Kong and our motherland,” he said. “Therefore, a few weeks ago, I voluntarily resigned from my positions as the executive vice chairman and CEO. I am very pleased that my father, Dr. Cheng Kar-shun, fully respects and supports this decision.”
Adrian added that he will continue to contribute to the business strategies of his brainchild K11 brand, which includes luxury malls and offices in Hong Kong and mainland China. In a separate announcement, New World said it plans to divest entities related to the K11 brand to Adrian. New World said the disposal is aimed at optimizing its cost structure, and the company will continue to receive royalty payment based on the revenue of the third party management business using the K11 brand.
Henry said in a separate statement: “I would like to thank my son Dr. Adrian Cheng for his many years of unfaltering support for the Group’s business, and his giving back to society while managing the company. I very much respect and support his decision to dedicate more time towards public service, and firmly believe that he will be able to bring about positive and far-reaching changes for society.”
Adrian has in recent years been actively involved in public services. The 44-year-old currently chairs the government’s Mega Arts and Cultural Events Committee, which is dedicated to bringing major events to Hong Kong, and its Hong Kong Academy for Wealth Legacy, set up to promote the city as a family office hub.
Ma, who joined the Cheng family’s business empire in 2018, was most recently the CEO of infrastructure arm NWS Holdings. A former Hong Kong government official at the Development Bureau, Ma is currently also on the board of Chinese state-owned conglomerate China Resources Group.
Meanwhile, New World announced that it is in talks to offload its entire stake in a mega sports venture development in Hong Kong to shareholder Chow Tai Fook Enterprises, the private investment firm of the Cheng’s family. New World in 2018 won the rights to design, build and operate the site of a former Hong Kong airport in Kai Tak district, which the company plans to transform into a sports park that includes a stadium with a seating capacity of 50,0000. The HK$30 billion ($3.9 billion) construction cost of the project is funded by the government, with New World covering all the operating costs.
Adrian’s unexpected departure is rare in Hong Kong’s property industry, which sees major developers helmed by their founding families. He had long been seen as the heir apparent to Hong Kong’s third richest family, which has businesses spanning industries from real estate and jewelry to energy and media. His status, however, was shaken after he struggled to turn around New World amid a property downturn in the city and mainland China, prompted by a mix of challenges including the Covid pandemic and interest rate hikes.
In the year ended June 2024, New World posted its first annual loss in two decades of HK$17.1 billion, the company said in a separate statement on Thursday. New World had earlier warned of a loss, citing asset impairment, investment losses, higher interest rates and a weakening yuan. The company’s debt level ballooned to 55% from 48.7% over the 12-month period through June, making it Hong Kong’s most indebted major property developer.
New World’s woes were followed by years of aggressive expansion under Adrian. A Harvard graduate with stints at UBS and Goldman Sachs, Adrian swiftly took on a leadership role after joining New World in 2007 and eventually securing the CEO position in 2020. He has rejuvenated the half-century-old family business with the innovative K11 brand, which blends artistic and cultural elements into malls, offices and even car parks.
Adrian made a name for himself with the $2.6 billion Victoria Dockside project, which transformed the site of the former New World Centre into a mixed-use development at Hong Kong’s Victoria Harbour waterfront. At the heart of the project is the K11 Musea art and retail complex, which opened in mid-2019, shortly before the pandemic hit Hong Kong. The high-end mall remained resilient despite Hong Kong’s retail slowdown, reporting a 17% year-on-year rise in sales in the year ended June.
But Adrian’s other big bets are facing challenges from a setback in Hong Kong’s property market, which saw home prices plunge to an eight-year low and office vacancy rates climbing to a record high. Adding to its growing debt levels were New World’s $2.6 billion entertainment and commercial complex next to the Hong Kong International Airport, which opened in phases starting from 2022, and its $1.3 billion K11 retail outlet in Shenzhen, slated to open by end of this year. Meanwhile, the company in July priced a joint residential project with Far East Consortium in the middle-class neighborhood of Kai Tak at the lowest level in eight years.
Adrian has been trying to improve New World’s liquidity, with plans to dispose HK$8 billion worth of non-core assets in the financial year ended June. New World in August reportedly received a HK$9 billion offer for its K11 Art Mall in Hong Kong from a subsidiary of China Resources. In March, the company sold a shopping mall in Hong Kong’s Tsuen Wan district to Chinachem Group for HK$4 billion. The company has also bagged about HK$22 billion from the sale of its stake in NWS to Chow Tai Fook Enterprises. But Adrian’s efforts have so far failed to boost New World’s stock price, which plummeted more than 40% over the past year; New World shares suspended trading Thursday.
In a rare interview in November with Hong Kong broadcaster HOY TV, controlled by Henry, the patriarch said he was considering tapping an outsider to lead the family’s business empire, throwing succession plans into question.
In recent years, Henry has elevated his children to leadership roles across his empire. Adrian’s younger brother Christopher was appointed as the co-CEO of Chow Tai Fook Enterprises in September, sharing the role with Cheng family member Patrick Tsang and outsider Gilbert Ho. Another brother, Brian, was promoted to co-CEO of NWS in December. Meanwhile, Henry’s daughter, Sonia, was named vice chairman of another family’s flagship, Chow Tai Fook Jewellery, leading the company along with Henry’s nephew Conroy Cheng. Sonia is also the CEO of the family’s Rosewood Hotel Group.