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Series director Tetsuya Nomura says that Kingdom Hearts III's release is still a while away
Nomura stated that Kingdom Hearts III (along with Final Fantasy VII Remake, which he is also working on) still has "a ways to go", with some worlds that remain untouched so far, and other unannounced worlds advancing in production. The relevant excerpt from the interview can be seen below, originally provided by Hachima and translated by Siliconera.
--What’s the development status on Kingdom Hearts III?
Nomura: “The production process is different than what we’ve had up until now, so I can’t just give you a general idea, but I can say that there are worlds that still remain untouched. We’ve advanced on the production of worlds that have yet to be announced, so we can’t show them for now. As far as development status goes, there’s still a ways to go.”
--What’s the development status on Final Fantasy VII Remake?
Nomura: “We’re making steady progress on its production. While we are indeed working on it, I think we’ll have you guys wait a little longer for both Kingdom Hearts III and Final Fantasy VII Remake.
I do apologize for that, but we’ll make up for it by making it into something that will meet expectations.
We didn’t share much information on either of the two titles last year, but I hope to show its progress at some event this year.
The release of these titles will still be a while. However, we have many titles releasing this year, and we hope you look forward to any ‘surprises’.”
The quote appears to imply that Kingdom Hearts III will definitely not be releasing in 2017, although, Nomura aims to show some of the game's progress off sometime this year.
Translations of the full interview can be found under the cut thanks to Catherine Mueller (firstname.lastname@example.org). Be warned that there are spoilers for Kingdom Hearts HD 2.8 HD Final Chapter Prologue!