Prospective investors are hunting for bargains in Hong Kong’s hotel real estate market, which is experiencing a sharp downturn, as tourists stay away from the city amid unprecedented protests over the past four months.
Analysts say the focus is now firmly on Singapore’s hospitality sector that has seen a boom in transactions because of a strong outlook for tourism, unlike Hong Kong.
Peter Yuen, managing director and head of investment and sales at Savills, said deals were becoming increasingly difficult to close, as potential buyers were targeting discounts of between 20 to 30 percent, but hotel owners were only willing to offer slight price cuts.
“Owners believe the market will recover once the social unrest is over,” said Yuen.
Transaction prices of hotel properties in Hong Kong have dropped 5 to 10 percent from the level before mass street protests erupted in June, according to Reeves Yan, head of capital markets at CBRE Hong Kong.
Last month, the 546-room Kimberley Hotel in Tsim Sha Tsui was sold for HK$4.3 billion (US$548 million), Land Registry records show. Property consultants said the price was about 28 percent lower than the owner’s original asking price of HK$6 billion.
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