Hong Kong's Murray Building seen fetching up to HK$4.2b

PUBLISHED : Saturday, 29 June, 2013, 12:00am
UPDATED : Saturday, 29 June, 2013, 5:18am

The tender sale of the 44-year-old Murray Building in Central, designated for conversion into a luxury hotel, is expected to attract interest from developers keen to obtain a site in the central business district.

Surveyors were upbeat about the sale even as uncertainty hits the residential market.

They forecast developers to bid from HK$2.27 billion to HK$4.2 billion - or HK$7,000 to HK$13,000 per square foot - for the building.

Vincent Cheung Kiu-cho, national director of Greater China at Cushman & Wakefield, a privately held global real estate services company, said developers with a presence in Central would probably submit bids.

"Due to the prime location, no other comparable site will be available for sale in the area any time soon," he said, noting that the government had decided not to sell the West Wing of the former Central Government Offices.

Located at Cotton Tree Drive, the 27-storey building has a maximum gross floor area of 325,073 square feet. The tender will open today and close on October 25.

According to the tender document, the winning bidder is required to maintain the building's exterior structure. The developer is allowed to use up to 70 per cent of the gross floor area for hotel rooms, and the remaining 30 per cent for entertainment and retail purposes.

"The developer can turn the building into a 200-plus room hotel, with each room sized at more than 1,100 sq ft. The rent for these hotel-style serviced apartments is relatively high," he said.

Cheung predicted the building could sell for HK$4.2 billion. He said large serviced apartments in the Mid-Levels are rented out at a monthly rate of between HK$50 and HK$60 per square foot, or HK$55,000 to HK$66,000 per month.

Charles Chan Chiu-kwok, managing director of consultancy Savills, said the building was worth HK$2.27 billion, or HK$7,000 per square foot, the lower end of estimates.

"On top of the cost of the building, the winning bidder needs to fork out about HK$4,000 to HK$5,000 per square foot for renovations," he said.

Midland Surveyors director Alvin Lam Tsz-pun said the building would sell for HK$3 billion, or HK$9,229 per square foot.

"The building will attract bids from developers and international hotel chains," he said.