Exclusive | Hong Kong property: New World and China Merchants Shekou to jointly develop Northern Metropolis project
State-owned conglomerate China Merchants Shekou Group has formed a partnership with New World Development to jointly develop a mixed-use project in the Northern Metropolis, with the residential component set to provide some 2,000 flats.
The investment comes as Hong Kong pushes the Northern Metropolis as a new engine of Hong Kong’s future growth and to integrate the area’s development with that of Shenzhen and other cities in the Greater Bay Area.
This is New World’s second collaboration with a Chinese state-owned conglomerate in the Northern Metropolis, following its venture with China Resources Group last year.
The Northern Metropolis project will cover an area of about 150,000 sq ft, close to Fanling and Sheung Shui. It will have a total buildable floor area of over 1 million sq ft and is estimated by the companies to have a market value of HK$15 billion (US$1.9 billion), according to sources familiar with the matter.
The site falls within the “Boundary Commerce and Industry Zone”, one of the four development zones outlined in the “Northern Metropolitan Area Action Plan” by Chief Executive John Lee Kar-chiu in his Policy Address last October.
The Northern Metropolis will provide around 500,000 new housing units and generate some 500,000 jobs upon completion.
Under the North Metropolis plan, the zone will promote advanced manufacturing industry andemerging industries such as food technology and modern logistics.
The formation work has been completed, including road connections, water, electricity and other infrastructure, so it can attract investment from central enterprises and accelerate the return of funds, according to sources familiar with the matter.
The zone has the potential to develop into an industrial centre for cross-border commercial services, retail financial services, medical services and leisure consumption, the source added.
New World has teamed up with China Merchants Shekou a couple of times in the past, including in 2022 on the MTR’s Tseung Kwan O Pak Shing Kok project. On the mainland, they jointly developed the K11 project in Shenzhen’s Prince Bay.
Last December, New World teamed up with China Resources Land to develop a project which is expected to have a total buildable floor area of about 720,000 sq ft and provide some 1,800 residential units. Construction is expected to start this year.
These joint venture projects will help New World ease its financial burden.
The company’s net debt of HK$118.9 billion as a percentage of equity rose to 49.9 per cent in December from 48.7 per cent in June last year, despite measures to trim capital spending and administrative costs.
New World has set an ambitious target of reducing its gearing ratio to below 40 per cent by 2027, from the current level of around 50 per cent.
