New World Scion%E2%80%99S Fall Upends Succession 23 Billion Dynasty
Hong Kong is renowned for its opulence and grandeur, but even by its standards, K11 Musea stands out. Known as the “Silicon Valley of Culture,” this lavish destination is the brainchild of Adrian Cheng, an heir to one of the city’s wealthiest families. It took Cheng a decade and a whopping $2.6 billion to bring his vision to life, on a prime harbor-front property passed down from his grandfather to his father and finally to him. However, just five years later, Cheng’s ambitious dream for his family’s New World Development Co and his own legacy has taken a dramatic turn for the worse.
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Cheng, aged 44, has unexpectedly stepped down as the third-generation leader of New World, a cornerstone of one of Asia’s most prominent business dynasties, sending shockwaves throughout Hong Kong’s elite society. In his place, the company’s chief operating officer, an outsider with no ties to the Cheng family, has taken over. The news has caused New World’s stock to soar by 17% on Friday morning.
This turn of events has left those close to Cheng speechless. While rumblings of a leadership change had been heard, it was highly unusual for a Hong Kong property dynasty to bring in an outsider to lead the family business. Behind the scenes, Cheng’s 77-year-old father, Henry Cheng, has stepped back onto the scene and taken back control of the family’s sprawling empire, including New World, according to sources familiar with the matter. He has also tasked his daughter Sonia, aged 43, his second son Brian, aged 41, and his youngest son Christopher, aged 35, with managing key aspects of the business group.
This development highlights the ripple effect of Hong Kong’s weakening real estate market, which has now reached its wealthiest citizens. As the market continues to soften, with home prices dropping by 25% since their peak in 2021, the Cheng family has grown increasingly concerned about their son’s leadership and the state of their business. They are determined to disprove the old Chinese adage, “Wealth does not pass three generations.”
Adrian Cheng, a Harvard-educated art connoisseur, struggled to match his late grandfather and father’s business acumen during his tenure as CEO of New World, a position he took up in 2020, four years after his grandfather’s passing. Under his leadership, the company’s debt has grown to unprecedented levels among Hong Kong’s major property developers, with a net debt-to-equity ratio of over 80% at the end of 2023, according to Bloomberg Intelligence. New World has also reported its first annual net loss in 20 years, equivalent to US$2.5 billion.
“Third-generation successors of large family empires are often under immense pressure,” commented Marlen Dieleman, a professor of family business at IMD Business School in Singapore. “Especially if they face economic headwinds, high expectations from family members, and significant visibility in the business community.”
As New World’s fortunes took a turn for the worse, so did the fortunes of the Cheng family, prompting concerns from family members that Adrian Cheng, the eldest son of Henry Cheng, was too consumed with his cultural pursuits, including those related to K11 Musea. In a television interview last year, Henry Cheng admitted that he was still searching for a successor, even though his son had been in the role for several years. Representatives for Chow Tai Fook Enterprises Ltd, the private investment arm of the Cheng family, as well as for Adrian Cheng and New World, declined to comment on the matter.
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