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Luxury operator believes in city

Luxury hotel operator Shangri-La Asia has given a vote of confidence to Hong Kong's hospitality industry after outbidding three competitors to win a waterfront site in Hung Hom for HK$2.328 billion.

The Lands Department announced the hotel site, with a potential gross floor area of 672,700 square feet, was awarded to Shangri-La Hotel (Kowloon), a wholly owned subsidiary of Shangri-La Asia yesterday.

Last week, the department said it had received four bids, including one from Sino Land, in the tender for the waterfront hotel site.

'The site sold for a lower than expected price as a hotel is a capital intensive development and requires a longer pay back period,' said Alvin Lam Tze-pun, a director of Midland Surveyors. 'Only a few developers could afford such a project, but it is a large site that commands a Victoria Harbour view and will be suitable for building a deluxe hotel.'

The winning bid was about 14 per cent lower than the market expectation of HK$2.7 billion.

Lam said the site had attracted big players such as Shangri-La Asia group reflecting their optimism in prospects for Hong Kong's tourism industry.

Shangri-La Asia opened its second hotel property, Island Shangri-La in Admiralty 20 years ago. Its first hotel, Kowloon Shangri-La, in Tsim Sha Tsui East was opened in 1981.

Excluding the area set aside for government quarters and a public transport interchange, Lam said the gross floor area for the Hung Hom site would be 558,341 square feet.

The price tag represented about HK$4,169 per sq ft, he said.

The acquisition came in the wake of the Hong Kong Tourism Board (HKTB) announcing the city had, for the first time, received 40 million visitors in a single year.

'We are seeing an increase from mainland China, as well as various short- and long-haul markets, which speaks volumes for Hong Kong's diverse appeal,' said HKTB chairman James Tien.

'Looking into 2012, a number of uncertainties in the macro environment, such as the European debt crisis, may affect our tourism. Nevertheless, we believe we should continue our investment in market promotions, including the long-haul markets, which have been and will remain our important sources of arrivals, helping us uphold Hong Kong's international appeal,' he said.

For the first 11 months of this year, HKTB said visitor arrivals to Hong Kong reached 37.77 million, 16.3 per cent higher than the same period in 2010, but also surpassing the yearly total for 2010. Of the total, mainlanders accounted for 66 per cent, or 25.27 million people.

Meanwhile, the Lands Department said a residential site in Mui Wo, Lantau Island was awarded to Sky Target (Hong Kong) for HK$55 million.

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