What: Hong Kong's New World Development is in late-stage talks to sell K11 Art Mall to China Resources for HK$9 billion.

Why it is important: The potential acquisition by a state-run Chinese company signals increased mainland investment in Hong Kong's prime assets.

Hong Kong's New World Development is in advanced discussions to sell its K11 Art Mall in Tsim Sha Tsui to state-run China Resources Longdation for an estimated HKD 9bn (USD 1.2 bn). The seven-storey mall, which opened in 2009, boasts nearly 100% occupancy and generates a monthly rental income of HKD 40 million. This potential sale is part of New World's broader strategy to reduce its net gearing ratio from 49.9% to the "mid to high" 30% range by June 2027. Over the past three fiscal years, the company has divested HKD 59.6 billion in assets, including other properties like D-Park Mall and Pentahotel in Kowloon.

The news comes as New World faces financial challenges, with the company estimating a net loss of up to HKD 20 billion for the year ended in June. This announcement led to a significant drop in the company's share price, falling more than 14% in early trading on Monday.

Hong Kong’s New World set to sell K11 mall for US$1.2 billion