The Excelsior, the iconic waterfront hotel built on the very first plot of land sold during the British colonial era, will shut at the end of March for redevelopment into an office tower, according to its owner. Mandarin Oriental International will tear down the four-star hotel and erect a commercial office tower on the site, which will take about six years to complete. The total development is budgeted at US$650 million, according to the company’s announcement on Tuesday morning. Mandarin Oriental has received approval from the government for a mixed-use commercial building with a gross floor area of about 683,500 square feet. The company did not release details on the size of the redevelopment. The Excelsior was much more than just a hotel, its admirers recall Mandarin Oriental put the hotel up for sale in June last year, but called it off three months later in September when bids fell short of expectations. The 869-room hotel at the time was estimated to be valued at more than HK$30 billion (US$3.83 billion). Built on Plot 1, the very first land parcel sold after Hong Kong became a British colony in 1841, the site was originally a warehouse of the British conglomerate Jardine Matheson, located on Gloucester Road across the Royal Hong Kong Yacht Club, and around the corner from Victoria Park. In pictures: Five iconic features of the Excelsior hotel James Riley, group chief executive of Mandarin Oriental Hotel Group, said: “The Excelsior has always been an important and much-loved hotel in the group’s portfolio. We will ensure there are plenty of opportunities over the next few months for local and international guests to visit the property and celebrate 45 years of memories.” Opened in 1973, the Excelsior is best known to local residents and tourists for its history as part of Hong Kong’s colonial past. It was a favourite spot among Hong Kong socialites, including the late Sir Run Run Shaw, founder and former chairman of the city’s premier broadcast television network TVB. The 1978 comedy Revenge of the Pink Panther by the late Peter Sellers was partly filmed at the Excelsior, and the hotel was the venue for a 1977 concert by Van McCoy, best known for his 1975 international hit The Hustle. Excelsior Hotel owner hoping to increase its value by HK$13.7 billion by converting it into an office block The redevelopment comes as Hong Kong faces a chronic shortage of grade A office supply. According to a report by global real estate services firm JLL in September, the government has failed to release adequate land on an annual basis for commercial development and instead focused on tackling the city’s housing shortage. Not just the Excelsior: six other Hong Kong luxury hotels long gone Only one grade A office development is expected to be completed in 2020, reflecting a 30-year low in terms of new supply, the report said. This is in contrast to a historical average of 2 million sq ft of annual absorption over the same period. The limited availability of office space has forced rents upwards, making Hong Kong the most expensive office market in Asia-Pacific. In the second quarter of 2018, Wan Chai and Causeway Bay had the strongest net uptake of grade A office buildings on Hong Kong Island, as companies relocated outwards from the central business district, according to a report by Colliers in August. The area saw a vacancy rate of 2.1 per cent, the third lowest across Hong Kong after Tsim Sha Tsui and Central. The overall grade A office rent increased 3.8 per cent quarter on quarter, the fastest quarterly increase since October to December of 2015. Wan Chai and Causeway Bay saw the highest increase in rental prices, of 5.1 per cent, fuelled by strong demand. Additional reporting by Louise Moon