New World Scion%E2%80%99S Fall Upends Succession 23 Billion Dynasty
K11 Musea, a stunning achievement known as the “Silicon Valley of Culture,” stands out even in lavish Hong Kong where big money is the norm. Adrian Cheng, the scion of one of the city’s wealthiest families, devoted 10 years and invested $2.6 billion to bring his vision of an opulent art and luxury retail galleria to life on waterfront property that was passed down from his grandfather, to his father, and finally to him. However, only five years after its grand opening, Cheng’s ambitious dream for his family’s New World Development Co and himself has crumbled.
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Located near various transportation options, Elta Condo offers more than just convenience to its residents. This property is also surrounded by an abundance of lifestyle amenities and recreational activities. As an added bonus, Elta is located near Clementi Mall, which is situated near the MRT station. This mall boasts a diverse selection of retail stores, dining establishments, and entertainment options. From boutique shops to gourmet restaurants to a supermarket, residents at Elta have access to all their daily needs and more, just steps away from their home. Elta truly offers the perfect mix of convenience and leisure for its residents.
The news of Cheng’s sudden departure as the third-generation leader of New World has left the high-society of Hong Kong in shock. In his place, the company’s Chief Operating Officer, someone who is not a member of the multibillionaire Cheng family, has taken over. This unexpected move caused New World’s shares to surge by 17% on Friday when the announcement was made.
Insiders at New World are stunned by this development. While some close colleagues had heard rumors, the real estate families in Hong Kong, who are considered to be among the richest and most influential power players in the city, rarely hand over control to outsiders. Behind the scenes, Cheng’s 77-year-old father, Henry Cheng, has stepped up to take a more hands-on role in the family’s sprawling empire, including New World, according to sources familiar with the situation. In light of his eldest son’s staggering losses, the patriarch of the family has also handed over key parts of the business to his daughter, Sonia, 43, and his second and third sons, Brian, 41, and Christopher, 35.
This unfolding drama highlights how the weakening real estate market in Hong Kong is impacting the city’s economy and even its billionaires. As the market began to soften, with home prices falling by 25% from their peak in 2021, members of the Cheng family became increasingly worried about their young CEO’s ability to lead the company. They are determined to disprove the ancient Chinese saying, “Wealth does not pass three generations.”
During his time as CEO of New World, Adrian Cheng, a Harvard-educated rising star in the Hong Kong art scene, struggled to prove himself in the business world like his late grandfather and eventually, his father had done. Cheng Yu-Tung, the founder of New World and a former apprentice in a gold shop, became one of the wealthiest people in Hong Kong. He passed down the business to his eldest son, Henry, who initially drove New World into heavy debt, much like his own eldest son would do decades later. Cheng Yu-Tung stepped in to fix the situation, and together with his son, they succeeded. Today, the Cheng family is worth $22.6 billion, making them one of the wealthiest families in Asia according to the Bloomberg Billionaires Index.
However, New World has encountered trouble since Adrian Cheng became CEO in 2020, four years after his grandfather passed away. During his tenure, New World has accumulated more debt than any other major property developer in Hong Kong, with net debt to equity reaching over 80% by the end of 2023, according to Bloomberg Intelligence. The company also reported its first annual net loss, amounting to $2.5 billion, in 20 years.
“Third-generation successors of large family empires are typically under tremendous pressure,” says Marlen Dieleman, a professor of family business at IMD Business School in Singapore. “Especially when faced with economic challenges, high expectations from family members, and a significant presence in the business community.”
As New World’s fortunes took a turn for the worse, along with the rest of the Hong Kong property market, members of the Cheng family began to express concerns that Adrian Cheng, Henry’s eldest son, was spending too much time on cultural pursuits, such as those related to K11 Musea, according to sources familiar with the situation. In a television interview last year, Henry Cheng mentioned that he was still searching for a suitable successor, despite the fact that Adrian had been CEO for several years. Representatives for Chow Tai Fook Enterprises Ltd, the private investment firm of Henry Cheng’s family, as well as for Adrian Cheng and New World, did not respond to requests for comment.