Hong Kong-listed Magnificent buys a London hotel for £70 million
Developer says current uncertainties are an ideal opportunity to tap into the high-demand hotel sector in London
Hong Kong-listed Magnificent Real Estate provided the much-needed silver lining amid the dark Brexit clouds yesterday after it agreed to buy a hotel in London for about 70 million pounds.
“We are probably the first company to buy a property in London amid the Brexit overhang,” said William Cheng Kai-man, chairman of Magnificent.
King Express Development, a wholly owned subsidiary of Magnificent, has agreed to buy the 408 room-Travelodge London Kings Cross Royal Scot Hotel at 100 King’s Cross Road for 70.3 million pounds, according to the company.
The deal came days after the result of the referendum in which the UK voted to leave EU by a margin of 52 per cent to 48 per cent.
Cheng said the uncertainties provided the company an ideal opportunity to get into the high- demand hotel sector in London, and the falling currency has made the deal more attractive.
Although the selling price is not negotiable, Cheng said “the big drop in the currency value was a huge advantage.”
The British pound fell 3 per cent to 1.3269 against the US dollar in at 5.30pm on Monday, extending its largest one-day drop ever at the end of last week. On Friday, sterling at one point plunged more than 10 per cent to US$1.3230, its lowest level since 1985, before trimming losses to US$1.3676, off more than 6 per cent.
With a price per square foot of just HK$5,000, and less than HK$2 million a room, the company sees the deal an undervalued, but ideal, acquisition opportunity.
Cheng said the deal makes sense cost-wise also as the asking price for a three-star hotel near Tin Hau on Hong Kong island was HK$6 million a room or HK$18,000 per sq ft. He said the total floor area and number of rooms in London hotel could be increased at a later stage by extensions and redevelopment.
“These are inherent advantages and are not related to whether England remains in the EU or not. The cheaper currency will bring more tourists and investors to London, a city that is known for its rich heritage, life style, architecture, asset protection etc,” said Cheng.
On being asked about the outlook for Britain after it leaves the EU, Cheng said : “I was educated in England and I appreciate the last 500 years of British success in every way . To be governed now under Brussels is just killing the British style, class...which the world adored for centuries. I am confident that Britain can do things their way and be as successful as they were in the last two centuries,” said Cheng.