Mandarin Oriental reclaims 5 billion reconstructions 45 years of history will be completed in March next year. Excelsior Hotel will be transformed into a commercial building.

The 45-year-old Hong Kong Excelsior Hotel reported the release of the sale last year. At that time, the market value of the company was over 30 billion yuan. The local large-scale developer, Xindi (016), bid for the auction, but ended up with a final stream. The owner, Wenhua Oriental, finally rebuilt the hotel. The stylus decided to close down at the end of March next year and spent about 5 billion yuan to rebuild it into a 68,800 square meter integrated commercial building, equivalent to 4 points and 1 Kowloon Station Global Trade Plaza. Reporter: Chen Jiaxiong

Singapore-listed company Wenhua Dongfang announced yesterday that the Excelsior Hotel in Causeway Bay will close at the end of March next year and redevelop a comprehensive commercial building with a total gross floor area of ​​approximately 684,000 square meters at the original site, with an investment of approximately US$650 million (approximately HK$5 billion). . It is expected that the reconstruction will take 6 years and the hotel staff will arrange to work in other properties under Mandarin Oriental. It is expected that after the completion of the redevelopment of the hotel, the deduction of the closing cost is estimated to bring about accounting revenue of approximately US$2.9 billion (approximately HK$22.6 billion). The redevelopment of the hotel reflects the high valuation of commercial properties in Hong Kong and the expected high return of commercial buildings.

The Excelsior Hotel was completed in 1973 and has a history of 45 years. It is a collective memory of many Hong Kong people. The hotel has 34 floors and more than 800 rooms. In February 2015, the Buildings Department approved the redevelopment of a 26-storey commercial building with a total floor area of ​​about 684,000 square meters. However, a spokesman for the Excelsior Hotel said that Excelsior had a good Revenue and cash flow, no immediate redevelopment plan, last year’s unprecedented bidding for sale, valued at 27 billion to 30.8 billion yuan, sensational market, and many large consortia to bid, including large-scale developers in Hong Kong, but ultimately did not meet Request, the flow of the sign to end.

It is expected to rent more than one hundred yuan in the future.

Zhang Qiaochu, deputy managing director of Colliers International Asia Valuation and Advisory Services, said that it is appropriate for Excelsior to choose to rebuild as a commercial building. The operating cost of the hotel is higher than that of commercial buildings. The maintenance cost of the hotel is not too light, and the supply of commercial buildings in Hong Kong is lacking. The vacancy rate of commercial buildings in Central, Wan Chai and Causeway Bay has been low for a long time. The vacancy rate of Grade A commercial buildings in Causeway Bay is about 1.7%. It is estimated that the property price per square floor of the property is about 4 to 45,000 yuan, the construction cost is about 7,500 yuan, the construction period is 6 years, the borrowing cost is about 5%, and the total construction cost has risen by more than 11,000 yuan. It is estimated that the rental rate will be between 100 and over $115 for each of the remaining flats in the future.

Lin Haowen, executive director of Knight Frank, said that after the reconstruction of Excelsior, the target is high-end office and retail properties. The original hotel is old and there is not much room for asset appreciation. After reconstruction, it can provide stable cash flow and huge asset value. The long-term rental return rate is 3.5% to 4%. The project return period is about 7 to 9 years. It is estimated that the entire project reconstruction cost will be about 5.5 billion yuan to 6.5 billion yuan. After the completion of the project and the rental stability, the property market value will be about 400 to 45 billion. Yuan, the office rents from 85 yuan per month, and the retail portion starts at about 200 yuan per month.