Kimberley Hotel sale takes 28pc hit

Business | Tereza Cai 18 Oct 2019

The Kimberley Hotel in Tsim Sha Tsui last month changed hands for HK$4.3 billion, slashing 28.41 percent from the initial asking price of HK$6 billion as prolonged social unrest saps the tourism market.

The hotel has a total floor area of 243,300 square feet and offers 546 rooms sized between 220 sq ft and 500 sq ft. Based on the transaction value, each room is worth HK$7.87 million.

The bidding price for hotel buildings in the market have been slashed up to 30 percent by potential buyers. Vendors' attitudes softened as they accepted prices cut during the backdrop of an overall economic downturn, said Stanley Poon Chi-ming, managing director at Centaline Commercial.

Hotel owners are cutting prices and leaving the market, with the initial price of a hotel building in Jordan dropping by 23-30 percent, compared with March last year's asking price of HK$3 billion.

Golden Wheel Tiandi (1232) announced plans last week to sell its Silka West Kowloon Hotel for HK$515 million, only 14 percent higher than the purchase price in 2017. The building has a total floor area of 35,804 sq ft with 141 rooms, with a value per room at HK$3.65 million.

Hanison Construction (0896) posted on Sunday that it bought 28-story Citadines Mercer Hong Kong. The property value rose 28 percent over the past five years.

Developers are adjusting their strategy, moving away from serviced-residence and hotel with short term leases to sites with long term contracts. The monthly rental income is expected to be HK$2 million, with a return rate of over 3 percent.

Hong Kong's volume of visitors fell by 39.1 percent year-on-year in August to 2.59 million people, according to Immigration Department data.

During the golden week holiday - the first-seven days of this month, visitor arrivals slumped by over 30 percent from last year to 2.34 million, with the overall number of mainland visitors more than halved to 671,000, the lowest figure of the national golden week in the past nine years.

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