Mandarin Oriental mulls sale of iconic Excelsior hotel in Hong Kong
Hotel on Causeway Bay waterfront could fetch up to HK$34 billion given high valuations for commercial property in the city
Mandarin Oriental International Ltd. is reviewing options for its iconic Excelsior Hotel in Causeway Bay after a government tender last month set a world record in Hong Kong real estate, bolstering its chances of fetching a similar price for selling the waterfront property.
The hotel operator said it decided to test market interest in a possible sale, according to a Monday statement. Shares of Mandarin Oriental rose 19 per cent in two days in Singapore to S$1.785 (HK$10.07).
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, around the corner from Victoria Park.
A four-star hotel, the Excelsior opened in 1973, and is best known to local residents and tourists for its history as part of Hong Kong’s colonial past.
It was the favourite spot of Hong Kong’s high society, including the late Sir Run Run Shaw, founder and former chairman of the city’s premier broadcast television network TVB. David Tung Wai, a broker and a close friend of Shaw, remembers the hotel well.
“Run Run and many financial market friends liked to go there for meetings or drinks in the old days,” Tung, 88, said in an interview with the South China Morning Post. “I particularly liked its live band and dance floor on the top floor. We had a lot of good time there. It’s sad to hear it being put up for sale.”
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.
A record HK$23.28 billion price fetched last month for the government’s sale of the Murray Road car park in Central boosted the valuation on Excelsior’s land, which is approved for development into a commercial building.
The 848-room hotel is likely to be valued at between HK$24 billion and HK$34.2 billion (US$4.38 billion), or between HK$35,000 and up to HK$50,000 per square foot, with a total gross floor area of 684,000 square feet (63,545 square metres).
“The valuation of the Excelsior could achieve a price close to Murray Road, as it’s located on the waterfront,” said Victor Lai, Centaline Professional’s chief executive. “The retail space on the ground level would also enhance its value, as Causeway Bay is the world’s most expensive address for retailers.”
Despite strong interest by mainland Chinese developers in Hong Kong’s property, Lai believes local developers will also be keen to buy the hotel and its land.
“Mainland parties prefer to buy en bloc, or the whole building, instead of redeveloping the property into office and commercial use,” he said.
Sun Hung Kai Properties, which owns the World Trade Centre adjacent to the Excelsior, could be a possible suitor, Lai said, adding that private equity funds could also be among the bidders for such a prime asset.