Foreclosed Hotel in Hong Kong’s Tin Hau Sells for 60% Below Asking Price

A hotel near Hong Kong’s Causeway Bay retail hub has sold for 60 percent less than the former owner’s asking price a year ago, as investors hunt for bargains amid plunging property valuations in the Asian financial centre.

Receivers acting on behalf of creditors have sold the 54-key Twenty One Whitfield hotel in the Tin Hau area to an undisclosed buyer for HK$260 million ($33.5 million), or HK$4.8 million per key, according to market sources who spoke to Mingtiandi. The property’s former owner, said to be a Taiwanese investor, had reportedly tried to sell the asset in March of last year for HK$650 million.

The sale comes as transactions involving distressed and loss-making deals made up nearly half of Hong Kong’s commercial investment in the third quarter, as investors taking advantage of steep discounts helped inject signs of life into the city’s moribund market, according to Colliers.

“In Q3 2024, the Hong Kong property investment market showed resilience, with total big-ticket (greater than HK$100 million) deal investment volume reaching HK$9.9 billion, a 13 percent quarter-on-quarter increase,” Colliers said in a report this week. “Notably, distressed and assets sold at a capital loss made up 48 percent of the big-ticket volume during the quarter, as investors took advantage of significant price discounts amid the ongoing market adjustments.”

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At HK$7,471 per square foot, the transaction price represents a 34 percent mark-down from the HK$395 million the former owner paid to acquire the property in 2014.

Located an eight-minute walk from the Tin Hau MTR station on Whitfield Road, the 32-storey hotel has a total floor area of around 34,803 square feet (3,233 square metres) and has gained popularity for its views of Victoria Harbour.

The hotel’s 54 rooms are situated on the sixth through 36th floors, with two rooms on each floor. The property had secured a mortgage from a major bank in 2019 and fell into foreclosure in September, according to local media accounts.

Student Housing Plays

The sale of Twenty One Whitfield comes as JLL in a report this month forecasted $500 million in Hong Kong hotel transactions this year, representing a 35 percent decline from 2023.

Despite the Hong Kong Tourism Board reporting a 43.7 percent increase in visitors during the first eight months of the year from the same period last year, hotel occupancy in June was roughly flat with the same month last year at 81 percent, while revenue per available room averaged HK$1,135 in the first half of the year, compared to HK$1,039 in the corresponding period last year, according to a report last month by Colliers.

With tepid tourism and a sluggish mainland Chinese economy continuing to weigh on Hong Kong’s hotel market, hotel owners have been marketing hospitality assets for conversion to student housing amid an influx of mainland Chinese students studying in the city.

In his 2024 policy address delivered last week, Hong Kong chief executive John Lee unveiled measures encouraging the expansion of student accommodation facilities in the city while promoting Hong Kong as an international hub for post-secondary education. JLL expects the measures, which streamline the application process for converting hotels into student housing projects, to attract investment into the sector.

“The latest Policy Address introduced a pilot scheme to incentivise the conversion of hotels into student accommodation by streamlining the application process for planning, lands and building plans, so as to encourage the market to convert hotels into student hostels on a self‑financing and privately‑funded basis,” Oscar Chan, head of capital markets at JLL Hong Kong said in a report this month. “This move is expected to stimulate investment interest, attracting more developers and investors to participate and inject new vitality into the market.”

In July, an entity linked to Centaline Property Agency founder Shih Wing-ching bought the 63-key Popway Hotel in Tsim Sha Tsui for a reported HK$180 million, with the project potentially able to provide 130 to 150 beds upon conversion. Centaline Investment, the property investing arm of Centaline Group, is planning to invest in approximately 2,000 student beds in Hong Kong over the next two to three years in anticipation of growing demand for student accommodation.

That deal came a month after Hong Kong Metropolitan University acquired the 255-key Urbanwood hotel in Hung Hom from the Law family behind local developer Yu Tai Hing for use as student housing to accommodate the university’s growing student population. Market sources indicating the asset changed hands at a price of roughly HK$1 billion.