the executive committee. Eric Ma Siu-cheung has assumed the CEO position of New World Development.  According to the company, Cheng resigned to dedicate more time to “public services and personal commitments”. “After long consideration, I decided to devote more time on public services in my next phase in life,” Cheng said in the earnings conference. “A few weeks ago, I initiated a resignation… and I’m very happy my father, Dr Henry Cheng, respects and supports my decision.” This move comes amid a challenging period for the company as it grapples with significant financial losses and a shifting real estate landscape in Hong Kong. Crippling results  New World Development posted a net loss of HK$17.1 billion (US$2.2 billion) for the year ended June 30.  Last month, New World Development was reportedly in talks to sell the K11 Art Mall in Tsim Sha Tsui to state-run China Resources. The company has divested HK$59.6 billion of assets during the past three fiscal years, including the D-Park mall, the 695-key Pentahotel in Kowloon, and a 51 per cent stake in a Cheung Sha Wan office project. Alongside the executive reshuffle, the company announced ongoing discussions with Chow Tai Fook Enterprise, a jewellery group controlled by the Cheng family, regarding the potential sale of New World’s entire investment in Kai Tak Sports Park. “The economic reasons behind the losses are elevated interest rates and weak consumer and business confidence in Hong Kong, which has affected rental income and property valuation,” Gary Ng, senior economist at Natixis, told Inside Retail.  “It was unfortunate that the K11 revamp coincided with Covid-19 and the change in consumer spending patterns, which has worsened the repayment pressure due to the high leverage.” According to Bloomberg Intelligence, New World Development has the highest debt level among its rivals in the past few years, with net debt to equity reaching 82.7 per cent at the end of last year compared to 41.4 per cent at Henderson Land Development and 21.2 per cent at Sun Hung Kai Properties.  “A key challenge for the new CEO will be bringing the firm back to a more sustainable debt level and delivering higher returns to shareholders,” Ng added.  Shares of New World Development surged by as much as 23 per cent after trading resumed following Cheng’s resignation. In a filing, the company announced it would spin off its flagship retail K11 brand management to a newly established company by Cheng for HK$209 million, aiming to reduce operating costs. The new CEO, Ma Siu-Cheng, was appointed as an executive director of the company in 2022 and became the COO last January.  Prior to New World Development, he was the acting CEO of Hong Kong-Shenzhen Innovation and Technology Park.  Succession  In a surprising statement last year, Henry Cheng Kar-shun revealed his search for a successor to lead the family’s extensive business empire, which includes New World Development and Chow Tai Fook Jewellery. Although Adrian Cheng was widely assumed to be the successor, Henry surprisingly did not rule out the possibility of appointing an external candidate, indicating a potential shift away from the traditional family-run business model. Adrian Cheng is the eldest son among Henry’s four children. While Sonia Cheng oversees Rosewood Hotel Group as CEO, Brian Cheng is currently the co-CEO of the infrastructure and construction business NWS Holding. The youngest son, Christopher Cheng, was appointed as co-CEO of Chow Tai Fook Enterprises.  The former CEO of New World Development graduated from Harvard and served at Goldman Sachs and UBS before joining the company in 2007.  In 2008, Cheng launched the K11 brand, a museum-retail complex that is at the nexus of art and commerce and had extended K11’s reach across retail, hospitality, offices and non-profit art education through K11 Art Foundation and K11 Craft & Guild Foundation.  He took over the CEO role in 2020. In addition to his business ventures, Cheng is known for his philanthropic efforts and support for the arts. He has been actively involved in various cultural initiatives and has worked to promote Hong Kong’s art scene on the global stage.  Luxury push for K11 brands Despite the company’s recent financial challenges, New World Development continues to push forward its K11 brand to increase foot traffic.  Last year, Louis Vuitton partnered with the cultural-retail development to hold its exclusive Men’s Pre-Fall 2024 Show for the first time in Hong Kong.  Sales at the K11 Musea shopping centre in Hong Kong soared following the global debut of the “100-per-cent Doraemon and Friends” exhibit, featuring the world’s tallest inflatable Doraemon figure earlier this year. The company reported that this event sparked a 30 per cent increase in foot traffic and a 60 per cent surge in tourist membership sales at K11 Musea, the district’s retail landmark. Over the next four years, luxury brands including Audemars Piguet, Balenciaga, Brunello Cucinelli, Loewe, Saint Laurent, and Van Cleef & Arpels plan to double their retail space at K11 Musea, expanding to as much as 30,000 square feet. Additionally, Prada will make its debut in the area, opening its first store at the shopping centre. Meanwhile, the group’s first flagship project of K11 in Mainland China, K11 Ecoast, is set to open later this year. K11 is expected to have a total of 34 projects with a total GFA of 2.7 million sqm in 12 major cities across Greater China.