Hong Kong’s Mandarin Oriental Hotel group began testing buyer interest in the Excelsior Hotel in the city’s Causeway Bay district for a sale that could bring the Jardines-owned luxury hotel brand as much as HK$27 billion ($3.4 billion).
The London Stock Exchange-listed hotel owner and operator announced on Monday that it is conducting a review of long-term strategic options” for the four-star waterfront property, noting that, “in light of the current strong commercial property valuations in Hong Kong, the Company has decided to test market interest in the possible sale of the property.” The statement also pointed out that the site has already been approved for development of a 63,500 square metre (683,500 square foot) commercial project.
In the past month, Hong Kong has already seen record prices paid for commercial sites in Central and Kowloon East, and the Excelsior could become the city’s most expensive property yet.
Setting a New Record High Price in Hong Kong
With its harbour front site and location in the city’s priciest shopping hub, the Excelsior could attract bidders interested in both the office value of its upper floors and the retail potential of a lower-level podium, Vincent Cheung of Colliers International said in an interview with the Hong Kong Economic Times. Cheung, who heads the international property consultancy’s valuation services team in Hong Kong, said that the project could be worth HK$27 billion, which would value the project at more than HK$40,000 per square foot of gross floor area.
Less than one month ago, developer Henderson Land Development made a car park in Central Hong Kong’s most valuable commercial property when it agreed to pay HK$23.3 billion ($3 billion) for the site at a government land auction. That transaction valued the 31,000 square foot (2,880 square metre) site near the Bank of China building and the Cheung Kong Centre at HK$50,064 per square foot, based on a maximum GFA of 465,000 square feet.
The total value of the Murray Road sale was shattered just one week ago when Nan Fung Development outbid 11 rivals to win a site for a 1,912,424 square foot commercial project near the former Kai Tak airport in Kowloon for HK$24.6 billion ($3.16 billion).
Now the Excelsior could be set to surpass last week’s Kai Tak deal by HK$2.5 billion. Among the most likely buyers for the project would be bidders who missed out in Central and Kowloon, with Hong Kong developers Cheung Kong Property Holdings, Wharf Holdings, Chinese Estates, Sun Hung Kai and New World all having swung and missed on both of the recent commercial site offerings.
While mainland developers have bid aggressively on residential projects in Hong Kong, Shimao Holdings was the only builder from north of the border to bid on both the Murray Road and Kowloon projects.
Jardines Sells a Piece of Hong Kong History
The Excelsior, which opened in 1973 was once a hangout for Hong Kong’s rich and glamourous with movie mogul Run Run Shaw having once been a regular at the hotel.
The location started its recorded life as “Plot 1,” the first land parcel sold when Hong Kong became a British colony in 1841, according to an account today in the South China Morning Post. The site had once served as a warehouse for Jardine Matheson, the parent company of Mandarin Oriental International.
The hotel group currently operates, or has under development, 46 hotels representing 11,000 rooms in 24 countries globally, but the Excelsior is its only sub-five star property and the only hotel not operated under the Mandarin Oriental brand.