Mandarin Oriental has reportedly been considering the next steps for its Excelsior Hotel in Hong Kong's Causeway Bay. According to the South China Morning Post, the hotel operator has decided to test market interest by putting the 848-room waterfront property up for sale. Mandarin Oriental’s shares increased 19 percent in two days in Singapore to $1.29.
After the government's sale of the Murray Road parking lot in Central for a record $2.98 billion, the Excelsior land's value surged, and the hotel is now likely to be worth between about $3.08 billion and $4.38 billion.
The land is currently approved for development into a commercial building. “The valuation of the Excelsior could achieve a price close to Murray Road, as it’s located on the waterfront. The retail space on the ground level would also enhance its value, as Causeway Bay is the world’s most expensive address for retailers,” Victor Lai, Centaline Professional’s CE, told the paper.
While mainland Chinese developers currently have a strong interest in Hong Kong property, Lai believes that local developers will also be interested in acquiring the site. Mainland parties tend to prefer buying a whole building rather than redeveloping the property into office and commercial use, he said.
Lai said that Sun Hung Properties, which owns the World Trade Center next to the Excelsior, could be a possible buyer, but that private equity funds are also possible bidders for such a prime asset.
The Excelsior opened in 1973 on the site that was once occupied by a warehouse of Great Britain's conglomerate Jardine Matheson on Plot 1, the very first plot sold when Hong Kong became a British colony in 1841. The site on Gloucester Road across the Royal Hong Kong Yacht Club and near Victoria Park is best known to locals and tourists as part of Hong Kong's colonial history. Not only was it a favorite spot for Hong Kong's high society, but also it was used for filming segments of the late Peter Sellers' 1970 comedy Revenge of the Pink Panther. It was also the venue for a 1977 concert by Van McCoy, who is best known for his 1975 hit The Hustle.