Receivers of the Sheraton Hong Kong Tung Chung Hotel and the Four Points by Sheraton have agreed to sell the dual-branded complex, which together comprise the city’s third-largest hotel by room count, for HK$2.7 billion (US$344 million), Shimao Group announced on Thursday.
In a filing to the Hong Kong stock exchange, the distressed mainland Chinese developer said the buyer was Oceanfront Hong Kong Limited, which is controlled by Malaysian property developer ParkCity Group.
The complex was seized by receivers after Shimao failed to sell it despite slashing the asking price to about HK$4.5 billion in late 2024 – down from at least HK$6 billion a year earlier.
“The sale price was well below the property’s valuation, meaning the banks would also take a loss on the disposal,” said Glen Ho, Deloitte’s Asia-Pacific contingency planning and insolvency leader. “This shows that Hong Kong is now a buyer’s market, with foreign investors seeing opportunities to enter after property prices have adjusted.”
Una Ge, a partner and managing director at AlixPartners and one of the receivers, said ParkCity was Oceanfront’s majority owner. ParkCity also has projects in Vietnam.
According to Companies Registry records, Oceanfront’s directors are Joseph Lau, who holds a Malaysian passport, and Keoy Soo Lik, who holds a Hong Kong ID card. It was incorporated on September 29. Lau is the CEO of ParkCity.
Shimao said the sale was expected to be completed by the end of the year, with the net proceeds to be used to partially pay off a loan taken out by the group in 2020.
“This will reduce the overall indebtedness of the group and strengthen its financial position, consistent with the group’s ongoing efforts to address its liabilities in an orderly manner,” Shimao said.
Savills arranged the bidding process for the 1,219-room property on Lantau Island, near Tung Chung MTR station and Hong Kong International Airport.
The receivers launched a global tender on June 23 and closed bidding on August 31. The HK$2.7 billion consideration is subject to adjustment and covers both the hotel properties and their operating business.
The property, completed in 2020 and registering a gross floor area of around 610,000 square feet, was estimated to cost more than HK$10,000 per square foot to develop. Savills said no floor price had been set for the tender.
AlixPartners’ Ge said the transaction was structured as two “interconditional” asset-sale agreements rather than a share transfer, allowing the buyer to acquire the hotel properties and operating business without taking on the indebtedness remaining in the borrower company.
Ge said Shimao’s management had been cooperative throughout the receivership, providing information to facilitate the sale. Lenders to it had also supported the process, she said, adding that the sale was expected to be completed by the end of the year, subject to the buyer securing funding and the finalisation of transfer arrangements.
AlixPartners and complex operator Marriott said in a separate statement that Marriott would continue to operate both hotels under their existing brands after the sale.
A ParkCity spokesman described the acquisition as “a rare opportunity to own one of the largest hotel properties in Hong Kong, at the gateway to the Greater Bay Area”, and said it was being viewed as a “long-term investment”, citing the hotels’ proximity to the airport, the Hong Kong-Zhuhai-Macau Bridge and planned developments.
The hotels recorded a blended occupancy rate of about 85 per cent in the first quarter of this year.
They also house one of Hong Kong’s largest event venues, featuring a 13,300 square foot column-free grand ballroom, function rooms and an outdoor garden, making them a destination for weddings and big events.
Should the deal be completed as scheduled, it will be another in a string of Hong Kong commercial real estate acquisitions by Southeast Asian buyers this year.
“We are seeing interest from both overseas and mainland Chinese investors in Hong Kong commercial properties, although buyers remain selective,” said Kelvin Li, director at Midland Commercial.
“The attraction is not just pricing following the property market adjustment. Interest in Hong Kong’s stock market and broader investment opportunities is also encouraging investors to take a fresh look at the city, with commercial property among the asset classes they are considering.”
By the middle of last month, Hong Kong had seen HK$30.36 billion worth of commercial property deals for properties selling for more than HK$50 million, according to data tracked by Savills.
Southeast Asian investors contributed HK$3.37 billion – or more than 11 per cent – of the total value, Savills said.
Mainland buyers contributed HK$1.75 billion, or 5.8 per cent, while Hong Kong-based capital accounted for HK$25.25 billion, or 83.2 per cent.
Thomas Chak, head of capital markets and investment services at Colliers, said: “International capital is becoming increasingly active in Hong Kong’s investment market, where it contributed 30 per cent of total transaction value in the third quarter, the highest share since the fourth quarter of 2022, signalling renewed appetite for Hong Kong commercial real estate following the significant repricing of the market.
“We are particularly seeing interest from Southeast Asian investors, including Singapore-based capital, as investors look beyond their home markets for assets offering attractive entry prices and longer-term upside.” -- SOUTH CHINA MORNING POST
