Hong Kong Property Giant to Boost Expansion in Health, Insurance
(Bloomberg) -- New World Development Co., one of Hong Kong’s biggest real estate companies, is accelerating its expansion into areas such as health care and insurance as it targets more business in mainland China.
Chief Executive Officer Adrian Cheng wants non-property services to generate as much as 30% of income in five to seven years, he said in an interview on Bloomberg Television. While he didn’t elaborate, revenues from insurance and other non-property strategic investments made up about 21% of the group’s income for the six months ended December.
The Hong Kong builder operates a range of other businesses including retail, aviation, infrastructure and transport. By doubling down on services including health care, education and insurance, it’s seeking to boost its presence on the mainland, the location for some of the group’s fastest-growing projects.
“The branding effect for New World is very important,” said Cheng, 41. “Because we are creating these integrated projects, we are also creating this ecosystem where you are able to cover all aspects of your life.”
New World has been betting on services outside of property development since 2017, when Cheng officially took the helm of the company founded by his late grandfather. In 2018, it agreed to acquire FTLife Insurance Co. for $2.75 billion and launched a health-care brand targeting seniors in Hong Kong.
The company is expanding in the Greater Bay Area by preparing for an insurance license in China and building a school, Cheng said. New World aims to be the largest Hong Kong developer in the economic hub, where it has spent more than HK$30 billion ($3.9 billion) acquiring 1.5 million square meters (16 million square feet) of land since 2016.
Cheng cited increasing disposable income and a young population as the draw cards in the area, which encompasses a cluster of cities in the Pearl River Delta.
New World is also planning to open 36 of its K11-brand retail and commercial projects in nine mainland cities as well as Hong Kong by 2025. The firm targets double-digit growth for its K11 rental projects and home sales in the next five years, according to Cheng.
Despite concerns about a growing number of people leaving Hong Kong, the property heir remained confident in the former British colony’s housing sector. He said there is strong demand from the middle and upper segments of the residential market.
“We are very optimistic with Hong Kong,” Cheng said. “We will grow together with Hong Kong.”
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