Hong Kong’s Excelsior Hotel can still be bought for the right price, says Mandarin Oriental CEO
- The harbourfront Excelsior Hotel can still be had for the right price, says owner Mandarin Oriental
- However plans to rebuild hotel as office tower proceed
The Mandarin Oriental Group will push ahead with its US$650 million plan to redevelop The Excelsior Hotel building in Hong Kong into a Grade A office tower, even as it holds out the possibility that it could still find a buyer for the iconic waterfront building.
Mandarin had called off an earlier sale, first announced in June 2017, after receiving lacklustre offers that failed to meet expectations, after valuers had forecast the property to fetch more than HK$30 billion (US$3.8 billion).
“At an appropriate price it continues to be an asset we would be willing to consider selling,” James Riley, group chief executive of the Mandarin Oriental Hotel Group, said.
“We sought to sell the property, we didn’t get offers which were at a level we felt appropriate, so the thing to do is to get on and do the redevelopment. If someone offers us a good price, the property remains available, but in the meantime we can develop a premium, luxury property.”
Mandarin Oriental announced on October 9 it would develop a 26-storey grade A office tower on the Causeway Bay site, a project expected to take six years and budgeted at US$650 million.
The existing 869-room four-star hotel stands on the very first parcel of land sold when Hong Kong became a British colony in 1841.
Mandarin Oriental, owned by British conglomerate Jardines Matheson Group, has received government approval for a mixed-use commercial building with a gross floor area of about 685,500 square feet.
Riley said the Mandarin Oriental would entertain offers from prospective buyers, even as it pushes ahead with the redevelopment.
“Jardines as a group is a developer through Hongkong Land, and we have a construction company through Gammon, so we can do that and produce a grade A quality office building and see where we go from there,” said Riley.
“However we are also very happy to continue to own it if offers do not match our expectations.”
Of its 31 hotels and seven residences, Mandarin Oriental does not run any other office blocks.
There are no plans to transfer the asset to Hongkong Land, the property investment, management and development company which is also owned by Jardines.
“It is a separate listed company with minority shareholders so it would only go to Hongkong Land if they were willing to buy it and were prepared to pay an appropriate price for the site,” said Riley.
Upon closure in March, Mandarin Oriental will move its offices from the site in Causeway Bay to Taikoo Shing in eastern Quarry Bay.
Employees of the hotel, meanwhile, will be given opportunities at other hotels in Hong Kong and at Mandarin Oriental hotels around the world.
Hong Kong’s Noon Day Gun, found near the Causeway Bay Typhoon Shelter opposite the hotel, will not be affected by the sale as it is owned by parent-company Jardines.
The Excelsior, which opened in 1973, has uninterrupted views over Victoria Harbour. Its redevelopment comes as Hong Kong faces a chronic shortage of grade A office space, which is pushing up rents, making Hong Kong the most expensive office market in Asia-Pacific.
Wan Chai and Causeway Bay had the strongest net uptake of grade A office buildings on the Island in the second quarter of 2018, led by companies wanting to relocate away from the central business district, according to a report by Colliers in August.
“It is a premium, harbourfront location, a 100 per cent owned block. They are like gold dust,” said Riley. “I think there are only about 10 single-owned properties on the harbourfront, of which this is one, so it is a pretty unique property.”
Riley said that plans for the redevelopment were approved by government in September 2018, with the stipulation that they be exercised within two years.