Butterfly Hospitality completed the Ibis in 2012 (Image: Accor)
Singapore’s CapitaLand Investment has joined the rush into Hong Kong student housing, with the Singaporean giant having acquired a hotel in the city’s Western District for HK$2.3 billion ($293.2 million), according to market sources who spoke with Mingtiandi.
The Temasek Holdings-controlled fund manager is buying the Ibis Hong Kong Central and Sheung Wan Hotel from Butterfly Hospitality Group, for conversion into student housing as a seed asset for expanding its Ascott living sector platform in the Hong Kong market.
The deal values the 217,978 square foot (20,251 square metre) property at around HK$10,552 per square foot and marks CapitaLand’s first major acquisition in Hong Kong since 2014 when the company bought The Mercer serviced apartments in Sheung Wan for HK$580 million, according to Mingtiandi records. CapitaLand representatives declined to comment when contacted by Mingtiandi.
CapitaLand’s buy of the 550-room Ibis property is the biggest transaction of a hotel in Hong Kong since China Cinda Asset Management purchased the Kimberley Hotel in Tsim Sha Tsui for HK$4.3 billion in 2019, and marks the latest in a wave of conversions of Hong Kong hotels for rental residential use, as property investors look to profit from a surge in overseas enrollment in the city’s universities.
Close to Campus
Located at 28 Des Voeux Road West in Sheung Wan, the Ibis is a short walk from Sai Ying Pun MTR station and just one stop away from Hong Kong University.
Andrew Chan joined CapitaLand in Hong Kong earlier this year (Image: LinkedIn)
The 34-storey tower was completed by Butterfly Hospitality parent firm Chanco Investment Group in 2012 and occupies a 14,580 square foot site under a 999-year leasehold. With nine floors set aside for retail and ancillary space, the building has 25 floors of guestrooms. Based on the number of guest rooms, CapitaLand is paying just under HK$4.2 million per key for the property.
The property is expected to be operated under the Adoor brand, a China-specific Ascott line which focuses on long-stay apartments for urban professionals and students with a minimalist style.
Capitaland Investment earlier this year hired former Crystal Investment chief investment officer Andrew Chan to serve as a managing director in Hong Kong looking after its living sector strategy, with Chan having earlier led acquisitions including the Incredible Residences residential and commercial building in Hung Hom and the Hotel Ease Access – Lai Chi Kok.
Both of those Kowloon properties were converted for student housing use under Crystal’s YX Living platform, with Chan also serving as CIO for that business.
The Ibis Hong Kong Central and Sheung Wan had been marketed to potential buyers through an informal process managed by CBRE.
Butterfly Hospitality in 2021 sold the Butterfly on Prat Hotel in Tsim Sha Tsui to Hines and Mindworks Ventures for HK$925 million, with that property now operated by Dash Living as Dash Living on Prat.
Hotel to Residential Deals Continue
The purchase ranks as the largest yet in a growing wave of Hong Kong student housing acquisitions, with many of those deals involving conversions of hotels for university accommodation.
The investments in student accommodation are a response to a change in admissions policies at Hong Kong universities, and concerns among mainland Chinese students about enrolling in US schools, local property firm Centaline last year estimated that 67,800 non-local students will be attending universities in the city by 2027-28. Around 50,000 of those are expected to need off-campus housing.
In July this year a unit of JD.com agreed to buy the Silka Seaview Hotel in Kowloon from Far East Consortium International for HK$750 million, with the mainland e-commerce giant intending to convert that property for student housing use.
JD’s buy came four months after Centaline Investment Management purchased the Regal Oriental Hotel in Kowloon City from HKEX-listed Regal REIT for HK$1.5 billion to add to its CampusOne Communities student housing platform.
Also in the first quarter, China Resources Longdation, a property investment unit of China Resources Holdings, acquired the Hotel Cozi Oasis in Kwai Chung from Stan Group for around HK$953 million, and Dash Living picked up the Butterfly on Morrison Hotel in Wan Chai from local investment house Gale Well for HK$360 million, with both properties being converted for student housing use.
