Hong Kong hotel operators mull converting their properties to residential buildings as home prices d
Some Hong Kong hotel operators are considering converting their properties into residential buildings as the tourism industry shows no sign of recovery and home prices start to rebound.The applications for conversion of two hotels – the Horizon Suite Hotel in Ma On Shan, and the Novotel Nathan Road Kowloon – to residential use were approved by the Town Planning Board on Friday.
The approvals will add more than 1,000 new flats at a time when home seekers are regaining confidence in anticipation that the Covid-19 vaccination will help revive the economy, according to property agents. Sales of new and used homes saw something of a mini-boom in January.
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“Hong Kong’s property market has proved resilient even with the city gripped by the anti-government protest from mid-2019, and a year-long Covid-19 pandemic,” said Raymond Cheng, head of Hong Kong and China research at CGS-CIMB Securities.
Centaline expects sales of lived-in homes to have reached a seven-month high of 4,000 in January.
Sales of new flats are likely to have surged by 164 per cent to more than 1,500 in January, from just 569 deals the previous month, it said.
The strong sales lifted prices of second-hand homes by 0.13 per cent in January, ending three straight months of declines, according to data provided by the Rating and Valuation Department. The index was still down by 4.3 per cent from a record high in May 2019.
“We cannot be too pessimistic about the residential market as the economy is likely to bounce back gradually once the [international] border reopens,” said Cheng, who said home prices could rise by 5 per cent this year.
The 800-room Horizon Suite Hotel, owned by CK Asset Holdings, has secured approval to be turned into a project comprising 758 residential units, according to a document it filed to the Town Planning Board.
CK Asset acquired the site for HK$120 million (US$15.5 million), or HK$199 per square feet, in 1998 through a government tender.
Last year, CK Asset also gained government approval to convert its 1,100-room Harbour Plaza Resort City hotel in Tin Shui Wai into a 5,000-unit residential project.
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At the same time, CSI Properties and Gaw Capital Partners have been given the green light to redevelop the Novotel Nathan Road Kowloon Hotel into a residential and commercial building comprising 285 units.
Last week, the government announced the number of new private homes to be built under Hong Kong’s land-sale programme in the financial year ending March 31, 2022 would drop to an 11-year low of 6,000 units.
“The lack of land supply for mass residential development will continue through the next two to three years, providing support for housing prices in urban areas,” said Dorothy Chow, senior director of valuation advisory services at JLL in Hong Kong.
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