New World Development Company Ltd.

30/F New World Tower
18 Queen’s Road Central
Hong Kong
(5) 5231056
Fax: (5) 8104673

Public Company
Incorporated: 1970
Employees: 2,800
Sales: HK$2.34 billion (US$300.07 million)
Stock Exchange: Hong Kong

New World Development Company Ltd. has for two decades been a leader in Hong Kong’s bustling commercial and residential development market. In 1990 it had an annual rental income stream exceeding HK$1 billion.

The founders of New World Development were Dr. Yu Tung Cheng, the current company chairman, and the late Chi Wan Young. In 1970 they joined up to merge their holdings in the colony’s commercial and residential property market.

Both men started their careers in Hong Kong’s jewelry trade. Yu Tung Cheng, who proceeded during the 1960s to become managing director of the Chow Tai Fook Jewellery Company, had already by the 1950s begun investing in Hong Kong’s real estate market. As chairman of many commercial property firms, and as vice chairman of Hang Lung Bank from 1970, Cheng was well placed in the Hong Kong business community.

So was Chi Wan Young. As principal founder and, eventually, general manager of Miramar Hotel & Investment Company, the worldwide hotels group, Young had amassed among his other positions the chairmanship of Yeung Chi Shing Estates and King Fook Gold and Jewellery Company.

In 1970, the two men linked their vast commercial and residential property holdings. Their aim was to acquire first class rental properties with the development for sale and rental of prime commercial and residential sites in mind.

The continuing increasing population of Hong Kong, and the shortage of land on which it might live and work, made the development of such commercial and residential sites potentially lucrative. In addition, Cheng and Young recognized Hong Kong’s increasing importance as an international financial center, with increasing inflows of foreign investment to the colony providing for different residential and commercial property needs.

New World Development was incorporated in Hong Kong on May 29, 1970, as a private limited company. The company’s first chairman was Dr. Sin-Hang Ho, the former chairman of Hang Seng Bank, one of the colony’s leading financial institutions. Ho, who served as chairman of the company until 1981, brought a number of his business associates to the new property concern. Liang Yuen Cheong, then vice chairman of the newly created New World Development, had been a director of Hang Seng Bank, as well as of the Hong Kong and Shanghai Hotels Company. He brought with him considerable expertise in Hong Kong’s property development and management market. Quo Wei Lee, appointed managing director of New World Development, had served as the general manager of Hang Seng Bank. In 1972, he was appointed a fellow of the Institute of Bankers in London. Among the other executives who joined New World Development as directors from the Hang Seng board were Sir Shiu-kin Tang, Tim Ho, and Michael Sandberg, who was later knighted for his contribution to Hong Kong’s business life.

It was not long before the company’s board elected to float the property concern on the Hong Kong stock market. In June 1972, New World Development became a quoted company when the board issued 96.75 million shares at HK$2 each. With the funds raised, New World Development financed the building of the New World Centre in central Hong Kong, complete with a shopping mall and commercial and residential properties. Today, the New World Centre contributes about half of the annual gross rental income of the company.

To facilitate construction work of its real estate projects, the company acquired in 1972 a 51% equity stake in Shun Fung Ironworks, for around HK$7.6 million. This was followed in 1973 by the purchase of a controlling interest in Hip King Construction, and the following year the acquisition of a 55% equity stake in Young’s Engineering Company.

Adverse market conditions in 1974, precipitated by poor market conditions worldwide, prompted New World Developments to increase its interests in the hotel trade. The company already had a stake in Miramar Hotel & Investment Company through the involvement of Chi Wan Young. Eventually in 1976, the company acquired the Kai Tak Land Investment Company and changed its name to New World Hotels. The publicly quoted company has since become the company’s 50.1% owned subsidiary handling all hotel operations, which today comprise six directly owned hotels and 11 managed hotels. These include the Regent of Hong Kong, New World Hotel, and Hotel Victoria. Recent additions to the portfolio include the Grand Hyatt Hong Kong and New World Harbour View Hotel, situated in the Hong Kong Convention and Exhibition Centre and commanding a view of Victoria Harbour.

Besides its interests in Hong Kong, the company manages six hotels in China, including the Jing Guang New World Hotel in Beijing and the Yangtze New World Hotel in Shanghai, opened in 1990. Elsewhere, the company acquired in 1987 the New World Harbourside hotel in Vancouver to take advantage of rising investment and emigration from Hong Kong reaching this Canadian gateway city to the North American market.

In 1980, New World Development purchased a 75% stake in Mei Foo Investments. This gave the company access to extensive residential properties in Hong Kong, 48,000 square feet of retail commercial space, and 16,000 square feet of space for use by schools.

Infrastructure servicing contracts from the Hong Kong government were included in the range of business New World Development was completing at this time. In 1982, the company was awarded a contract to develop three massive projects under the colony’s Home Ownership and Private Sector Participation Scheme. A year earlier, the company won a contract from the U.S. government to redevelop six prime sites in exchange for a lease to rent key properties for development by New World Development.

In 1983, the continuing effects of worldwide recession, and the resulting dampening effect on Hong Kong’s property market, led the company to diversify into shipping. New World Development purchased a 60% interest in the Hong Kong Islands Line Company, which operated cargo services across the Atlantic. This business was subsequently sold in February 1989. Even so, by 1985, New World Development had purchased a 39% stake in the Hong Kong-based Asia Terminals Limited, the largest container freight station and cargo distribution center in southeast Asia. Phases one and two of the terminal site were opened in 1987. Increased business by the cargo handling operation led to the construction of phases three and four, due to open in 1993. The second airport planned for Hong Kong, in the colony’s port vicinity, has convinced New World Development to plan a phase five addition to the terminal. The result will be a 13-story container complex, with a total of 5.2 million square feet of space.

The year 1984 saw the start of New World Development’s most ambitious project to date: the construction of the Hong Kong Convention and Exhibition Centre, with its ultramodern facilities providing space for international gatherings on a waterfront site in Wanchai. Commissioned by the Trade Development Council, the complex was opened in November 1988. Over 853 events of varying size, involving both international and local Hong Kong participants, were held at the convention center in 1989 alone. Finding occupants for the residential properties in the luxurious convention center has, however, been a slow process. A 70% occupancy rate was attained by the end of 1990, with about 310 units let.

New World Development began in 1986 to develop over 1,100 residential units on Lantau Island. Construction was carried out in partnership with the Hong Kong Resort Company, with whom New World Development had established a joint venture. In the same year, New World Development entered another partnership with Caltex Petroleum Corporation of the United States to redevelop the oil company’s depot in Tsuen Wan. This turned the site into Riveria Gardens, a residential estate of 6,200 flats with commercial facilities.

A further joint venture agreement was signed at the time with the Canton Railway Corporation of Kowloon. This called for over 1,400 residential units to be developed, with commercial facilities, in the vicinity of the Light Rail Transit System in Tuen Mun, which came to be known as Pierhead Garden.

In 1987, the success of the Lantau Island development convinced New World Development to construct further residential properties, in conjunction with the Hong Kong Resort Company. On the infrastructure side, the company entered a joint venture agreement with the colony’s Mass Transit Railway to develop the Sai Wan Ho site situated above the Sai Wan Ho station on Hong Kong Island.

In 1988, New World Development took a 24% interest in the Gammon/Nishimatsu consortium behind the building of the four-kilometer Tate’s Cairn Tunnel, to run from Siu Lek Yuen in Shatin to Diamond Hill. The consortium gained a 30-year franchise to run the first private sector tunnel in Hong Kong. Opened in May 1991 in a bid to ease traffic congestion in East Kowloon, initial traffic estimates for the tunnel began at 100,000 vehicles daily. In 1988, New World Development purchased a one-third interest in Asia Television, one of the two television license holders in the colony. The television station has since undergone an extensive restructuring, complete with job cuts and capital investment programs. Satisfied with progress on this front, New World Development in 1989 raised its stake in Asia Television to 50%. Subject to approval from the Hong Kong government, the television concern has planned the construction of a new production center to open in 1993.

In late 1989, New World Development increased its presence in the hotel trade by acquiring Ramada International Hotels & Resorts, the world’s third-largest hotel chain. In a separate agreement, an affiliate of Prime Motor Inns agreed to operate Ramada hotels in the United States, while the Hong Kong company retained control of all Ramada Renaissance properties in the United States, and all Ramada properties outside that important market. In July 1990, Prime Motors Inns sold its rights to operate the U.S. Ramada hotels to the Black-stone Group of New York. In early 1990 New World Development sold 14 Ramada properties in the United States to reduce the bank financing necessary for the original acquisition.

The company has also been actively developing properties in China, although the events of 1989 in Beijing dampened short-term prospects in this expanding Asian market. Besides longstanding involvement in the Chinese hotel trade, in June 1990 New World Development signed two investment contracts with the Guangzhou municipal government to develop the 26.5-kilometer Guangzhou ring road and the 600,000-kilowatt Zhu-jiang thermal power station.

In the long term, the handing-over by Britain of Hong Kong to China in 1997 continues to affect New World Development’s prospects in the colony. Even so, New World Development remains committed to servicing the commercial and property needs of Hong Kong, strategically placed as it is as a growing international financial and economic center on China’s doorstep.

Principal Subsidiaries

Billion Town Company Limited; Bir-kenshaw Limited; Bright Moon Company Limited (75%); Capital System Limited; Cheong Yin Company Limited; Convention Plaza Apartments Limited; Fook Hong Enterprises Company Limited; Fook Ying Enterprises Company Limited; Gold Queen Limited; Hang Bong Company Limited; Happy Champion Limited; Head Step Limited; Hip King Construction Company Limited (59%); Hong Kong Island Development Limited; International Property Management Limited (55%); Joy Sky Limited; Kin Kiu Enterprises Limited; King Lee Investment Company Limited; Lung Kee Investment Company Company Limited; Mei Foo Investments Limited (75%); New World Finance Company Limited; New World Nominee Limited; Nice Kingdom Limited; Polytown Company Limited; Pontiff Company Limited; Prime Harbour Limited; Quality Imports Limited; Shun Fung Ironworks Limited; Sorany Company Limited; The Dynasty Club Limited; Thyme Company Limited (70%); Timely Enterprises Corporation Limited; Yargoon Company Limited (62%); Young’s Engineering Company Limited (55%); Yue Wah Enterprises Company Limited; Bianchi Holdings Limited (Jersey); Beames Holdings Limited (British Virgin Islands, 64%) Fook Hang Trading Company Limited (50%); New World Indosuez Insurance Services Limited (50%); Soon Start Limited (50%).

—Etan Vlessing