New World Development will terminate its contractual agreements for the 11 SKIES project with Airport Authority Hong Kong on April 1, 2027, ending the developer’s involvement in one of the major commercial and entertainment developments linked to Hong Kong International Airport.
The developer said on Wednesday that the termination forms part of an arrangement under which assets connected to 11 SKIES will be transferred to the Airport Authority. New World Development, which is listed in Hong Kong under stock code 0017, will also pay an early termination fee of HK$2.3 billion.
The agreement marks a major change in the ownership and future management of the project. Instead of remaining under the existing contractual arrangement, the Airport Authority will take control of the relevant assets and develop them through a new operating structure.
Airport Authority to receive project assets
Under the arrangement, New World Development’s significant shareholder, Chow Tai Fook Enterprises, has granted the Airport Authority an option to acquire for HK$1 the shares held by CTFE.
The Airport Authority said the assets connected with 11 SKIES include three office towers and an entertainment hub. These assets will be transferred to the authority free of charge.
The authority will also receive more than HK$3 billion from New World Development, made up of cash and cash equivalents, in addition to the transfer of the relevant assets.
The arrangement gives the Airport Authority direct control over properties that were developed as part of the wider 11 SKIES project. The authority now plans to put a dedicated structure in place to manage the assets and pursue new commercial opportunities.
Airport Authority chief executive Vivian Cheung Kar fay said the assets acquired under the arrangement are of excellent quality and are ready for leasing.
The authority plans to establish a dedicated subsidiary and professional team to oversee the project. Its stated aim is to bring in major entertainment operators and commercial partners from international markets.
The project is expected to form part of the wider SKYTOPIA development programme around Hong Kong International Airport. Operations across the projects are expected to begin progressively from 2028 to 2029.
That timetable places the Airport Authority in a position to reshape the commercial use of the assets before operations begin. Leasing and partnership decisions will therefore become an important part of the next phase of the project.
New World faces HK$2.3 billion termination cost
For New World Development, leaving the agreement comes with a substantial financial charge.
The company will pay HK$2.3 billion as an early termination fee to the Airport Authority. The payment comes as the developer continues to address significant financial pressure and reduce exposure to assets that have weighed on its accounts.
New World Development also expanded its facility agreement with Deutsche Bank AG to HK$4.9 billion from HK$3.95 billion. The increased facility builds on an agreement signed in June and provides the company with additional financing capacity as it manages its balance sheet and ongoing commitments.
The company reported a loss of HK$26.8 billion for the financial year covering 2025 and 2026. The reported loss was primarily driven by non cash impairment charges and provisions connected to the 11 SKIES project.
The scale of those provisions shows how heavily the project affected the company’s financial statements. While the termination arrangement brings an additional HK$2.3 billion payment, it also removes the developer’s future obligations under the contractual structure and transfers responsibility for the relevant assets to the Airport Authority.
Revenue falls as property handovers decline
New World Development said it had achieved a turnaround to a HK$2.23 billion net profit for the period between 2025 and 2026, although the company’s broader financial figures showed continued pressure in several parts of the business.
Revenue fell 28 percent year on year to HK$20 billion.
The decline was mainly linked to lower construction revenue and fewer property handovers in the Chinese Mainland. Increased property handovers in Hong Kong partly offset the reduction.
Capital expenditure also declined. The company spent HK$11.8 billion during the period, representing a 6 percent decrease.
New World Development did not declare a final dividend for the year ended June 30. No dividend was declared for the year.
The decision comes as the company focuses on its financial position and the management of its property portfolio. The developer has also continued to generate sales from residential developments and asset disposals across Hong Kong and the Chinese Mainland.
Hong Kong sales provide major contribution
Total attributable contracted sales from property development projects and asset disposals reached approximately HK$29.6 billion.
Hong Kong accounted for approximately HK$22.1 billion of attributable contracted sales. The figure was supported mainly by residential projects including The Pavilia Farm III, Deep Water Pavilia, Pavilia Rosa, The Legacy and The Pavilia Forest.
The sales performance shows the importance of Hong Kong residential projects to the developer’s revenue pipeline at a time when the company is dealing with weaker construction revenue and reduced property handovers in the Chinese Mainland.
The company’s mainland operations generated approximately 6.8 billion yuan, equivalent to about HK$53 billion, in attributable contracted sales.
The Southern Region was the largest contributor to those mainland sales, accounting for about 53 percent of the total. The Greater Bay Area formed the main part of that regional contribution.
Airport Authority prepares for a new phase
The transfer of the 11 SKIES assets gives the Airport Authority greater control over the development and leasing of commercial space connected to the airport area.
The authority intends to build a new operating team around the assets rather than simply maintaining the existing project structure. Its plans include seeking international entertainment operators and commercial partners to occupy and operate parts of the development.
The three office towers could provide leasing opportunities for businesses seeking space close to the airport, while the entertainment hub gives the authority another component through which it can pursue tourism, retail and entertainment related activity.
The development will also sit alongside other projects within the SKYTOPIA programme, with the authority expecting operations to begin progressively from 2028 to 2029.
For New World Development, April 1, 2027 will mark the formal end of its contractual involvement with 11 SKIES. Before that date, the company faces the HK$2.3 billion termination payment and the broader process of transferring the relevant assets under the new arrangement.
For the Airport Authority, the next task is more operational: establish the dedicated subsidiary, appoint its professional team, secure suitable commercial and entertainment partners, and prepare the assets for leasing and opening.
How will the Airport Authority reshape 11 SKIES before operations begin from 2028?