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Snippet | Hotel sale shows developers can still find investors

Hong Kong Blog Snippet 20220209 1536x1040

In the latest Colliers Snippet, Valuation & Advisory Services Director Nancy Chan says the Hotel sáv transaction shows developers that investors have not turned away from the hospitality sector.

Even though Hong Kong took in HK$73 billion in investments in 2021, the hotel sector only made up 5% of that total. This is not surprising given the pandemic’s drastic effect on tourism. Nevertheless, the hotel sector performed well in 2021 compared to the year before. Certain hotels are being used as quarantine hotels. Others have seen a boost in staycation demand and the need for extended-stay offerings. So, all is not lost for hospitality.

At the end of last month, 20 December 2021, Chuang’s Consortium International Limited agreed to sell Hotel sáv in Hung Hom to VIA IV (BVI) Holdco 7 Ltd. And VIA IV is 90% owned by AEW, a real estate investment manager founded in Boston in the United States.

Hotel sáv is in the heart of Hung Hom, close to three Mass Transit Railway Stations – Whampoa, Ho Man Tin and Hung Hom. It is a 24-storey building with a total site area of approximately 10,204 sq. ft, offering a total gross floor area of roughly 122,108 sq. ft. It comprises retail units on the Ground and First floors – totalling around 10,045 sq. ft. The upper floors consist of a hotel that offers 388 keys that average about 200 to 300 sq. ft. 

Before the transaction, the hotel had provided long-stay options for guests, and disposing of the asset to an international investor will help Chuang’s Consortium replenish its working capital and liquidity to reinvest in other sites.

"There is strong optimism in the market and investment potential for the co-living sector due to its stable income and growth potential"

Given the limited housing supply and Hong Kong’s high rent-to-income ratio, co-living has emerged to offer alternative affordable accommodation, especially for young professionals. “From the perspective of investors, there is strong optimism in the market and investment potential for the co-living sector due to its stable income and growth potential,” Colliers’ Capital Markets & Investment Services team has said. Developers wishing to sell their assets may find international funds a rich hunting ground.

This latest transaction shows that the hotel market continues to pivot for survival and institutional investors like AEW and its counterparts seek hotel investment opportunities. They like the idea of having assets that generate a stable income while operating it as co-living, long-stay, student or multi-family accommodation.

And when the borders do reopen, these investors will already have a foothold as the sector roars to life.

The Hong Kong market remains one of the most dynamic globally, and the hotel sector still has space to grow, especially when compared to other gateway cities such as Tokyo, New York and London.

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Nancy Chan

Associate Director

Valuation & Advisory Services

Hong Kong

Nancy joined Colliers in 2019, she is specialising in valuation and advisory services. She is always willing to help her client and gives her professional valuation  advice on their properties, assets, plant and equipment, business and financial instruments. 

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