Lai Sun returns to hotel business in Hong Kong
Chew Fook Aun of Lai Sun Development explains why firm is re-entering the hotel business
Years after it demolished two five-star hotels it owned in Central to make way for office projects, midsize developer Lai Sun Development is looking to re-enter the hospitality industry in Hong Kong.
The firm will enter the bidding to build a hotel on Lantau Island. The Airport Authority of Hong Kong invited expressions of interest from developers to build a 1,200-room hotel of at least a three-star grade on part of the SkyCity car park near the AsiaWorld-Expo.
The tendering to build the hotel closes on March 31.
"We see demand for hotel rooms far outstripping supply, as the city has only about 60,000 rooms," Lai Sun deputy chairman Chew Fook Aun said.
The government recently predicted 70 million tourists would visit the city per year by 2017.
In October, Lai Sun, chaired by Peter Lam Kin-ngok, who is also chairman of the Hong Kong Tourism Board, said it would invest HK$4.1 billion to build a 495-room resort hotel in Ocean Park. It beat six firms to win the tender.
The Ocean Park hotel, with a total gross floor area of 366,000 square feet, will be managed by Marriott International and is slated to open by early 2017.
It will be Lai Sun's first hotel in Hong Kong since it demolished the 28-year-old, 517-room Furama Hotel in 2001. The grade A offices of AIA Central now occupy that site.
In 2008, Lai Sun tore down the 216-room Ritz-Carlton Hotel, adjacent to the Furama, to make way for the development of the CCB Tower. The firm has a 10 per cent stake in AIA Central and a 50 per cent share of CCB Tower.
Lai Sun owns 95 per cent of the Starr Hotel in Shanghai and a 26 per cent stake in the Caravelle Hotel in Ho Chi Minh City, Vietnam.
Chew said Lai Sun was expanding its holdings to increase its rental income.
With the opening of its commercial-retail project in Observatory Road, Tsim Sha Tsui - a 50-50 joint venture with Henderson Land Development - and its Ocean Park hotel, the company's investment portfolio will expand 31 per cent to 1.84 million sq ft in 2017, according to Chew.
On the mainland, Lai Sun's investment portfolio would increase to 5.61 million sq ft by 2019, up 128 per cent from 2.45 million sq ft at present, Chew said. Its mainland property development subsidiary, Lai Fung, and a unit of eSun will develop a 2.8 million sq ft "creative culture city" in Hengqin, the special economic zone off Zhuhai.
At the end of 2012, Lai Sun joined ousted Sun Hung Kai Properties chairman Walter Kwok Ping-sheung in buying a residential site in Tseung Kwan O for HK$2.86 billion, or HK$4,929 per sq ft.
"Taking into account construction costs, the total cost will be HK$8,000 per sq ft. Current transaction prices are more than HK$10,000 per sq ft in Tseung Kwan O. Our flats will enjoy a full sea view. The land price is okay," he said.