SF Giants Minority Owner Sells Wan Chai Serviced Apartments for $71M

A serviced apartment block in the Wan Chai area owned by a tycoon who also owns a slice of the San Francisco Giants baseball team has become the latest Hong Kong living sector asset to change hands at a bargain price in recent weeks with a private buyer having scooped up the property after it was reported to have been on the market for more than three years.

A provisional sale and purchase agreement was signed last Thursday for Chi Residences 138, located at 138 Johnston Road, with the transaction set to close by 30 December, the property’s register of transactions filed with the government showed. The seller, Chi Residences, is controlled by local tycoon Philip Morais, who had purchased an initial 5 percent stake in the San Francisco Giants in 1992, before later expanding that holding. 

The 107-unit property is being sold for HK$550 million ($71 million) to Adrian Fu, scion of the Fu clan which founded the Furama hotel chain, according to market sources who spoke with Mingtiandi. The deal parallels the acquisition of The Connaught Hotel earlier this month by a wealthy local family.

The living sector deals are the latest in a series of sales of small hotels and apartment blocks in recent weeks, as hospitality and rental housing assets continue to be the most saleable properties in a depressed Hong Kong market. 

Exiting at a Discount

The HK$550 million exit price for Chi 138 works out to HK$5.14 million per unit, which represents an approximately 57 percent discount from the average room price when the owners put Chi 138 on the market together with sister properties, Chi 120 in Sai Ying Pun and 314 in Jordan as early as April 2022.

Last September, market sources indicated that Chi Residences faced the impending maturity of a HK$1 billion ($128 million) loan from HSBC. Colliers launched an expression of interest campaign for Chi 138 and Chi 314 last October, asking for a combined HK$900 million.

Chi 138 is located opposite the Wan Chai MTR station and offers studios, one-bedroom units, two-bedroom units, three-bedroom duplexes as well as a full-floor penthouse. Monthly rents for the units range from HK$23,000 to HK$150,000. 

Launched in 2007 by Morais following his sale of the Shama serviced apartment portfolio to Morgan Stanley Real Estate and Gaw Capital Partners a year earlier, Chi in July last year sold the 19-unit Chi 120 to a private buyer for HK$188 million ($24 million).

Chi Residences had earlier disposed of two serviced apartment assets in Hong Kong, including selling Chi 138 in Sai Ying Pun to a 50:50 joint venture of HKEX-listed builder Hanison Construction Holdings and US private equity firm Angelo Gordon in 2018 for HK$730 million.

Rebranded as The Connaught hotel in 2019, the asset was put up for sale by the joint venture last September for HK$600 million and changed hands again earlier this month for HK$410 million.

In 2019, Chi Residences sold the 21-unit Chi 393 in Yau Ma Tei to local paint and property firm CNT Group for HK$183 million.

Policy Moves Spark Deals

Chi Residences 138 is changing hands as rents for serviced apartments have been moving up for three straight quarters, with indices tracking the sector in Hong Kong up about 6 percent in June from the third quarter of 2024, according to Savills research.

The sector is also being helped along by policy changes that are encouraging investments in student housing.

“With the newly released Policy Address 2025 that streamlines the conversion of commercial buildings into student hostels and increases non-local student quotas further from 40 percent to 50 percent, traditional serviced apartments are also expected to benefit regardless of whether they choose to convert their properties into student hostels or not, as the overall demand for student accommodation is expected to rise,” Bobby Mak from CHFT Advisory and Appraisal told Mingtiandi.

The Nate, a serviced apartment building with a retail podium in Tsim Sha Tsui seized by creditors after a default by Schroders Capital, sold for HK$272 million ($35 million) last month, according to market sources who spoke with Mingtiandi. The buyer is reportedly Tang Kai-ming, founder of Japanese-style noodles restaurant chain Beppu Group.

Also finding a new owner recently was the Bauhinia Hotel at 5-9 Observatory Circuit in Tsim Sha Tsui, with local press reports earlier this month indicating that Hon Kwok Land has sold that 98-room property for HK$335 million.  The new owners are said to be planning to convert the hotel for use as student accommodation.