While analysts fret over the future of Hong Kong, there are signs that religion may be on the rise and vice in decline in the city after a Taoist temple in Kowloon East bought out a neighbouring short-time hotel.
The Hotel Fortuna at 5 Rutland Quadrant Road, which backs against the Rutland Quadrant Childrens’ Playground and sits next to the Creative Kindergarten nursery school, was sold to the Shang Sin Chun Tong (省善真堂) Taoist temple for HK$300 million ($38.3 million), according to an account in the Hong Kong Economic Times.
The Taoist abby triumphed in a public tender for the hotel, which specialises in renting rooms by the hour. The auction sale was brokered by Savills director Frances Chow, on behalf of seller the Hang Lee Lung Company (恆利隆有限公司), which acquired the two-storey building 40 years ago.
There was no immediate indication that the Taoist temple will continue to operate the Hotel Fortuna in its current line of business.
Vice Pays in Kowloon East
Hang Lee Lung’s 1978 investment in the property five minutes walk south of the Kowloon Tong MTR station appears to have paid off, bringing the company an 1,160 percent increase over its earlier HK$2.9 million purchase price. This latest transaction values the hotel at HK$46,956 per square foot of built area.
“It is worth mentioning that the last transaction on Rutland Quadrant took place in 1999. This shows how rarely such sites come to the market,” Frances Chow, Director of Savills Realty said in announcing the tender in August.
Documents supporting the sale indicate the plot ratio for the hotel property remains at 0.6, restricting new owners to low-rise development. In the tender, the property sold for the indicative price first indicated in promotions for the sale.
The Shang Sin Chun Tong temple is believed to have purchased the property to allow it to expand beyond its current location one door away at 7,8 Rutland Quadrant Road, where it operates the largest Taoist Abbey in Hong Kong. The temple was most recently added to in 1990, according to Sina.com.
Shang Sin Chun Tong temple, which was based in Sham Shui Po when it was founded 60 years ago, had moved to Kowloon Tong in 1970. Shang Sin Chun Tong was originally registered as a limited company in 1967 but had been certified as a “non-profit Taoist charitable organisation” a year later.
Shang Sin Chung Tong also owns the Cameron Mansion in Lion Rock Road, where they use the second floor as a traditional Chinese medicine clinic, while leasing out the rest of the property for residential purposes.
Hong Kong Property Owners Keep Selling Hotels
With tourist arrivals from mainland China having declined and the emergence of technology-based accommodation startups such as Airbnb disrupting the market, Hong Kong hotels are embattled, Hong Kong Business indicated in May of this year.
Souring sentiment regarding hospitality assets has encouraged conversions of older hotels into office or retail properties.
In March of this year, Li Ka-shing’s Cheung Kong Asset Holdings applied to turn one of its Kowloon hotels, the Harbourview Horizon in Hung Hom into a pair of 29-storey office buildings, with the hope of boosting income.
“If redeveloped into an A-grade commercial building, the price is estimated at around HK$ 18,000 to HK$20,00 per square foot. Monthly rent … could translate into a long-term rental return of 3 to 4 percent,’’ Thomas Lam, head of Hong Kong advisory and consulting at Knight Frank, said in an interview with SCMP.
With ever-more-buoyant valuations popping up in the market, industry analyst at DBS Jeff Yau told Hong Kong Business earlier this year that it will “convince owners of three to four star hotels at prominent districts to redevelop the property into office spaces or commercial buildings.”