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the continued adjustment in the property market continues to impact the performance of hong kong real estate companies.

new world development co., hong kong's most indebted major property developer, expects to post its first annual loss in 20 years this year.

the company expects to lose hk$19 billion to hk$20 billion ($2.4 billion to $2.6 billion) in the year ending june, according to a filing with the hong kong stock exchange late friday. the company blamed asset impairments, investment losses and rising interest rates.

in recent years, new world development, which is controlled by billionaire cheng yu-tung's family, has attracted widespread attention from the market due to its high debt level.

affected by its debt level, market concerns about its financial condition and investors' pessimism about the real estate market, new world development's share price has plummeted 35% this year, becoming one of the worst performing real estate company stocks in hong kong, far lagging behind the hang seng index's 5.5% increase over the same period.

reasons for the huge loss: insufficient revenue recognition and two large provisions

new world said insufficient revenue recognition from major projects including the parkview tower i and the parkview tower ii affected the company's core profit.

in addition, two large asset impairment provisions were also the main reason for the company's profit "shrinkage".

new world said that the revaluation of investment and development properties, including goodwill assessment, will result in non-cash losses of up to hk$8.5 billion to hk$9.5 billion.

separately, in june last year, the cheng family proposed to acquire a business from new world to help reduce the company's debt. the transaction transferred cash from the family investment holding company to new world, but also resulted in a one-time non-cash loss of nearly hk$8.3 billion.

a company spokesperson said that all one-off non-cash revaluations and provisions do not affect the company's cash flow, which is to prepare for a fresh start in the future. the company has also completed more than hk$50 billion in loan arrangements and debt repayments this year, and its overall financial situation is sound.

hong kong real estate companies are "all bleak"

not only new world development, but the entire hong kong real estate market is in trouble under the dual pressure of high borrowing costs and economic downturn.

home prices are at an eight-year low, weighing on developers such as new world holdings ltd. meanwhile, vacancy rates in the office market have hit a record high, further weighing on rental income for major developers.

recently, hong kong real estate companies such as hongkong land, hang lung, wharf property, and swire properties have successively released their first-half 2024 results.

among them, hong kong land's net profit attributable to shareholders was a loss of us$830 million in the first half of the year, and the loss further widened; wharf property's attributable profit to shareholders in the first half of the year was a loss of hk$1.052 billion, a year-on-year decrease of 158.28%; hang lung properties' attributable profit to shareholders in the first half of the year was hk$1.061 billion, a year-on-year decrease of 55.68%; swire properties' attributable profit to shareholders in the first half of the year was hk$1.796 billion, a year-on-year decrease of 19%.