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HONG KONG | Ritz Carlton Redevelopment | COM

Ritz-Carlton in line for offices facelift
10 April 2006
Hong Kong Standard

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Lai Sun Development may redevelop the Ritz-Carlton as a hotel plus offices project to capitalize on surging office rentals in Central.

"We are studying the possible redevelopment of the Ritz-Carlton Hong Kong site," said chairman Peter Lam in the company's interim result statement Friday.

"Given the strong demand for prime office premises and the dearth of new supply in Central, prime office rentals in Central are likely to remain firm and could increase further," he added.

Lam cited the adjacent AIG Tower, which has achieved rents above HK$90 per square foot a month in tenancies signed up last year. Lai Sun has a 10 percent interest in the tower.

Lai Sun Development expects the current Ritz-Carlton site of about 15,000 square feet to provide not less than 225,000 sq ft of office space under current building regulations, which will not require paying any land premium or modifying the land lease with the government.

Ritz-Carlton Hong Kong, which is 65 percent owned by Lai Sun Development, has achieved an occupancy rate of 93 percent with rising room rates during the six months ending January 31, 2006.

Lai Sun swung back to a profit of HK$231 million for the six months ending 31 January 2006 from a loss of HK$1.17 billion in a year ago, thanks to the HK$178 million gain from revaluation of investment properties.

Rents for top-grade office space leaped 45 percent to the current average of HK$460 per sq ft per month from 2004, and very little new space is expected to come on to the market in the medium term.

As a result, rents for prime office space in the central business district are expected to jump a further 20 percent this year, according to real estate consultancy CB Richard Ellis.

The present average vacancy rate at such properties is at a rock-bottom 4.8 percent, said CB Richard Ellis.

Kenny Tang, associate director at Tung Tai Securities, said: "The site [of Ritz-Carlton] has great redevelopment value as the market estimates the supply of grade A office [space] in the near future will be scarce, and demand for grade A offices will climb due to the buoyant economy.

"The proposed office-hotel complex will be a very valuable asset that may be separately listed in the form of a REIT [Real Estate Investment Trust]. That will help boost Lai Sun's share price."

Lai Sun Development had once accumulated debts amounting to HK$10 billion after paying a record HK$6.8 billion for a 65 percent stake in the former Furama Hotel _ which was later developed into AIG Tower _ before the Asian financial crisis and the subsequent Hong Kong property market crash of 1997. But a turnaround in rentals has helped the company reverse its fortunes and its shares have so far surged almost 140 percent this year, closing at HK$0.385 Friday.

The Ritz-Carlton first signed a yearly management contract with Lai Sun to operate the Central property in 1993. It is up for renewal in the second half of the year.

Sources in the local property market do not expect the lease to be renewed this year.

Early farewell for a five-star favourite hotel
13 January 2008
South China Morning Post

With just 216 rooms and no ballroom to host major functions, the Ritz-Carlton is one of the smallest five-star hotels in Hong Kong.

Unfortunately, at 6pm on February 1, the hotel will be no more. A victim of the booming market for prime office space, the hotel will close just 15 years after opening - destined, it turned out, to face crisis after crisis.

Owner Lai Sun Development is replacing it with an office tower. The Ritz-Carlton will re-emerge in two years, across the harbour at West Kowloon's International Commerce Centre (ICC), and in Macau.

"The purpose of the closure is economics," Mr Lettenbichler said. "The hotel was not supposed to close until the end of 2009, when it moves to Kowloon. But with the interest in office space, investors looked at the site and saw the business model and the money that can be made by making it an office tower.

"In Central throughout the years, we've seen the Hilton go, the Furama and now the Ritz-Carlton. Yes, there seems to be a little bit of a void in hotel rooms in Central. But I think economics and business sense have taken over as far as office space goes, which is unfortunate. But that's the reality of today."

When Mr Lettenbichler took over the reins at the hotel in September 1998, its future was already uncertain.

"There was a lot of scepticism in the market," he said. "I know when I arrived, everyone was saying the hotel was going to close tomorrow or be torn down tomorrow. Many rumours in the community started when the hotel was to open but was delayed.

"I told the ladies and gentlemen of the hotel to concentrate on what we can control and not worry about what's being said in the market, or we'll go crazy every day. That's what we did."

In July 1991, Ginzu Golf Service, the Tokyo-based real estate company that owned the hotel, collapsed and went into receivership. This sparked speculation that the hotel would be sold off. After wrangling over the price - with figures around HK$1.6 billion cited at one stage - Diamond String, a Lai Sun-led consortium, agreed in May1993 to buy it for almost HK$1.2 billion.

As the guests started coming, Hong Kong was hit by the Asian financial crisis, then flak from the September 11 attacks and Sars.

"I remember that evening of September 11 because we had a reception at the presidential suite for our top customers, as well as people from the US consulate," Mr Lettenbichler said.

As the hotel prepares to close, almost all the staff have found jobs with Ritz-Carlton elsewhere, particularly on the mainland, or with other hotels.

Mr Lettenbichler will oversee the opening of new Ritz-Carlton hotels. The ICC development will see the Ritz-Carlton occupy the top 16 floors of the tower with about 300 rooms. The signature restaurant Shanghai Shanghai, however, will move to another location in Central.

The hotel will auction off about 250 items including artwork and chandeliers in the week of February 11. In Macau, the new hotel will be at the Macau Studio City development.

The article didn't really say it implicitly, but am I safe to assume that the building itself is going to be torn down? Or is it just going to be renovated into an office building?

When I was in Hong Kong, the Ritz struck me as one of the least interesting buildings in Central.

Quote:

Lai Sun Development expects the current Ritz-Carlton site of about 15,000 square feet to provide not less than 225,000 sq ft of office space

^The new building - if the existing one is to be demolished - won't be as big as its neighbour. AIG has a gross floor area of 450 000 sq ft.

the old Ritz Carolton is hiding behind the AIG Tower.

I've always liked that building, I remember it as "Kim Plaza" from Sim City 3000 Unlimited.

http://www.juegomania.org/SimCity+30...+Unlimited.jpg

Its sad to see it go, but I knew it would happen eventually when I saw this picture earlier:

http://upload.wikimedia.org/wikipedi...l_20080321.jpg

Interesting to see what this will look like. Low(er) profile developments are always so mysterious as details and renderings aren't always released to the public.

HONG KONG | Ritz Carlton Redevelopment | U/C

AIG turned into AIA. Bloody bankers.

6/29
By Hilson1974 from dcfever :

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