Hotels outside Hong Kong’s flashy areas should avoid the rush to convert to offices, Colliers says
Eight hotels are converting to office space – or taking steps to make it an option. But while eye-watering office rents are tempting, Colliers says hotel owners outside ‘core’ areas could regret converting and miss out on a big wave of tourists headed this way.
Tempted by soaring rents, some of Hong Kong’s hotel owners in upscale areas are converting their properties into office space. But one analyst is warning against a greed stampede.
Eight hotels are now being refurbished, redeveloped or on the drawing board for the shift, representing more than 2,000 hotel rooms, according to a Colliers International report released on Wednesday.
Seven of them are located in what the Hong Kong government calls “core” areas -- Sheung Wan, Central, Wan Chai, Causeway Bay and Tsim Sha Tsui -- which are upscale and appeal to businesses. Central especially stands out -- it is the world’s most expensive office address. The exception is one hotel being considered for conversion in North Point.
The properties could rake in more in office rent than what they fetch for hotel rooms.
But hotels in “non-core” areas -- where office rents are lower -- could miss out on an expected run-up in tourist arrivals if they convert, a misstep that occurred in 2009 when a similar hotel-to-office rush left some hotel owners worse off, Colliers said.