New World Cheung Sha Wan office project reportedly cuts price by 57%, falling below land acquisition cost

Bloomberg has reported, citing sources familiar with the matter, that the commercial building project "83 Wing Hong Street" at 83 Wing Hong Street, Cheung Sha Wan, jointly owned by investment company Ares Management Corp. and New World Development (00017), has recently lowered prices to sell some units of the project.

According to sources, compared to the prices when the project was launched in 2024, the asking prices for some properties have been reduced by as much as 57%, including discounts and rebates. They said that although sales have picked up after the price cuts, this also reflects the challenges faced by owners of commercial properties in non-core areas in closing deals.

Sources revealed that New World and Ares have launched some units in recent weeks, with the lowest price per square foot after discounts and rebates being only HK$5,600, while other units are priced at around HK$7,000 per square foot. This is far below the initial launch price of about HK$13k per square foot in 2024. Additionally, these prices are also lower than the price at which New World purchased the land plot in 2017, which was about HK$8,000 per square foot.

The report indicates that Hong Kong real estate investors must now contend with intersecting market trends: the commercial real estate market continues to be plagued by high vacancy rates, especially in areas outside the core business districts; on the other hand, the residential market is seeing a full recovery. According to data from CBRE, as of the end of March, Hong Kong's office vacancy rate remained at 16.8%, close to historical highs, mainly due to a large influx of newly completed office buildings entering the market.