Shenmue 3 is powered by Unreal Engine 4 and is in development at Yu Suzuki's independent company, Ys Net, located in Tokyo along with many original Shenmue team members.
Suzuki provided a heartfelt update to the KickStarter supporters over on the official page, noting, "To all of our backers, we are very sorry for the delay". Maybe this delay will give the developers time to add in 20 extra hours of forklift driving segments. So any extra time that can be used to deliver the best quality game is a positive, in my eyes.
Deep Silver has confirmed that Shenmue 3 is being pushed back to 2019.
When Yu Suzuki took the stage to announce a Kickstarter campaign for Shenmue 3 in 2015, the initial expected release date was December 2017.
The game's Kickstarter campaign raised over $6 million U.S. with over 69,000 backers in July of 2015 and has been in development ever since. "Deep Silver today announce that their upcoming release Shenmue III has been moved and will now release in 2019", the announcement reads. We've waited this long. Shenmue 3 quickly met that crowdfunding goal, and in the years since then, new information about the game has been only sporadic. "We can not thank you enough for your enduring support".
Fortunately, it seems that its highly-acclaimed predecessors, Shenmue and Shenmue II, are still set to get their high-definition releases for PS4, Xbox One, and PC in 2018, with SEGA also releasing a Shenmue compilation for the PS4 later this year.