Hong Kong mega-collector Adrian Cheng, the scion of one of the city’s leading property developers, is reportedly trying to sell the K11 Art Mall, the first major project from his K11 brand, according to local media.

Cheng’s New World Development (NWD), a Hong Kong-listed company controlled by one of Hong Kong’s richest families, is said to have been offered HK$9 billion (about $1.2 billion) by CR Longdation for the seven-story mall on Hanoi Road in Tsim Sha Tsui, a busy shopping and tourist district on Kowloon peninsula, the newspaper Sing Tao reported on Friday. CR Longdation is a subsidiary of the Chinese state-owned conglomerate China Resources. Cheng serves as NWD’s executive vice chairman and CEO.

NWD and CR Longdation did not comment on the media reports. Artnet News reached out to New World for comment, but has not yet received a reply.

A general view of K11 Art Mall in Tsim Sha Tsui. Photo: K. Y. Cheng/South China Morning Post via Getty Images.

Reports of a possible sale of the K11 Art Mall, which opened in 2009, came just before NWD issued a profit warning on Friday night. The company said in a Hong Kong Stock Exchange filing that it is expecting to report a loss of HK$19 billion to HK$20 billion ($2.4 billion to $2.6 billion) for the financial year that ended in June, citing a “lack of revenue recognition” of major projects, interest rate hikes, and depreciation of the renminbi. The company stated that provisions were one-off, non-cash, and unrealized items and they did not affect the group’s cash flow. The audited figures will be disclosed in its annual results scheduled to announce in September.

NWD is said to be the most indebted major property developer in Hong Kong. The company had a net gearing ratio (a measure of debt to shareholder equity) of 49.9 percent in December, one of the highest among all developers in the city, and it has set a target to reduce the ratio to 40 percent or under by 2027, the South China Morning Post reported on Friday. Following repayments of loan and debt amounted to HK$35 billion ($4.5 billion) in the first half of this year, the company finalized further loan arrangements and debt repayments of more than HK$16 billion ($2.05 billion) in July and August.

The company’s stock price dropped to its lowest since 2003, and now has a market cap at HK$19.76 billion ($2.5 billion). Earlier this year, the company’s K11 Group reportedly laid off its creative team and cut 20 jobs.

This week, Cheng’s nonprofit outfit K11 Art Foundation will stage generative art exhibition “Lunar Water” in the Seoul, as the Frieze art fair runs in the city.. The event is part of Seoul Auction’s “2024 Connect Seoul” program at Gangnam Center. Cheng will also launch new initiatives, the K11 Salon and the K11 Curator Prize.

The glass globe in the K11 mall. Photo: Marc Fernandes/NurPhoto via Getty Images.

Cheng is the grandson of late Hong Kong tycoon Cheng Yu-tung, who founded the New World empire and jewelry chain Chow Tai Fook. Adrian Cheng represents a young generation of Hong Kong’s wealthiest families and he brings his love for art and culture to business with the launch of the K11 brand under NWD. K11 Art Mall opened to the public in December 2009. Over the years, the mall has grown into an attraction to young people and middle class, with a wide range of retail options, display of artworks, and cultural events. The reported offer to purchase the mall was expected to generate a five percent return.

Following the launch of K11 Art Mall, Cheng went on to expand the K11 Group and opened several outlets across China, including its flagship K11 Musea in Hong Kong, Shanghai K11, and K11 ECOAST in Shenzhen, a $1.4 billion development which is expected to open towards the end of this year.

Cheng has also been actively taking up public roles to promote art. He is currently chair of the Mega Arts and Cultural Events Committee, which advises the Hong Kong SAR government’s Mega Arts and Cultural Fund. The fund has been backing major international events staged in Hong Kong, including art fairs such as Art Basel, Art Central, and Shanghai 021’s Hong Kong edition, which debuted on Thursday. Cheng was seen attending one of its opening events.

Adrian Cheng attends the opening night of City as Studio at K11 MUSEA on March 19, 2023 in Hong Kong, China. Photo: Keith Tsuji/Getty Images for K11.

In February, 2023, Cheng took on the role of co-chair of the board the Meta Media Group (formerly known as Modern Media), one of China’s largest publishing companies which operates art publication titles such as the previous Chinese version of The Art Newspaper (now rebranded as The Art Journal) and ArtReview. Seven months later, he resigned from the position of co-chair in October “to devote more time to his other business.” He also resigned from the positions of non-executive director, honorary vice-chairman, and chief strategic advisor of the group. He remained as an art consultant for the group.

NWD’s financial woes have placed the Cheng family’s succession saga in the spotlight. Doubts of whether the high-profile Cheng will be fully taking over the family business empire grew as his father, Henry, said last year that he was still in search of a successor.

On Friday, it was announced that Henry Cheng, Hong Kong’s third-richest tycoon, has appointed his other son Cheng to take up the investment vehicle of New World as co-CEO. The Cheng family has another business conglomerate Chow Tai Fook. Henry Cheng’s daughter Sonia is the vice-chair of its Chow Tai Fook Jewellery Group and CEO of Rosewood Hotel Group, which is controlled by Chow Tai Fook.

This article was updated on September 9.