Investors snap up Hong Kong hotels for conversion to long-term leasing, student accommodation as tourism industry remains in doldrums

Since the onset of Covid-19 some 14 hotels have changed hands, mostly for conversion to co-living or student accommodation, says Colliers

Investors are attracted by the relative resilience and stable cash flows, say analysts

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Last week Stan Group offered the 598-room Hotel Cozi Harbour View in Kwun Tong for sale at an asking price of HK$3.1 billion (US$400 million). Photo: SCMP Pictures

Published: 8:45am, 22 Mar 2022Updated: 7:39pm, 22 Mar 2022

International funds and local investors are snapping up hotels in Hong Kong with the intention of converting them for long-term leasing and student accommodation as the outlook for the city’s tourism industry remains uncertain.

In the past, hotel owners were reluctant to offer their properties for sale as millions of international travellers poured in every year. But many changed their minds as the 2019 anti-government protests and the ensuing Covid-19 pandemic brought the industry to its knees.

Since the onset of the coronavirus crisis in early 2020, some 14 hotels have changed hands, the vast majority of them acquired for conversion to co-living or student accommodation, with more in the pipeline as activity accelerates in the sector, said Shaman Chellaram, a senior director of Asia valuation and advisory services at Colliers.

Last week Stan Group, owned by the family of the late billionaire Tang Sing-bor, offered the 598-room Hotel Cozi Harbour View in Kwun Tong for sale at an asking price of HK$3.1 billion (US$400 million), or HK$5.2 million per room.

The indicative price was 22 per cent higher than that of the Hotel Sav in Hung Hom sold by Chuang’s Consortium International last December.

“There will be more hotels put on the market later,” said Oscar Chan, head of capital markets at JLL in Hong Kong.

Chan expects valuations for hotels in urban areas to keep rising as buyers are attracted by the potential of a stable income from long-term leasing or co-living, as opposed to traditional guest revenues.

Investors may also choose to tap the growing demand for student accommodation. The conversion of hotels for that purpose is a new trend in Hong Kong.

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