Hotel investors and developers in Hong Kong are turning their attention to…strip malls? Apparently so.
According to the South China Morning Post, an influx of mainland tourists has made the landlords of small shopping centers (in residential areas) start to convert them into hotels.
Alnwick Chan Chi-hing, the head of valuation and professional services at surveyor Knight Frank, said occupancy rates at shopping centers in less central areas were low. "The owners could generate a higher income if they convert the properties into hotels as there is a shortage of guest rooms in the city," he tells the South China Morning Post.
For example, Hutchison Whampoa has applied to the Town Planning Board for permission to convert the three-floor retail podium of the Hunghom Bay Centre's three residential blocks into an 86-room hotel. The property could attract tourists keen to stay at a hotel close to the Hung Hom train station and Tsim Sha Tsui.
Similarly, Barry Law Law-wai, the former owner of a real estate agency, has applied to convert the Tsui Chuk Commerical Centre into a 52-room hotel. In Sham Tseng, Tsuen Wan, Chan Kee Restaurant has applied to redevelop its low-rise Chan Kee Plaza into a 22-story hotel with 96 rooms.
"The occupancy rate of a shopping center has to reach at least 70 percent. Otherwise, it would be difficult to keep the tenants and attract shoppers," Chan continues. "Many small shopping centers in non-core areas are facing the problem of high vacancy rates. Now, they could convert the property into a budget hotel targeting mainland tourists."
Photo courtesy of Bloomberg