For the first time, individual serviced apartments are up for sale in Hong Kong.
The launch by the Ovolo Group will test the appetite of the market, as well as allow the company to raise cash for expansion, as real estate prices continue to escalate.
“This move has been done before, with various big chain properties selling the residences wing within their main hotel, (but) not by any serviced apartment providers in Hong Kong,” said Girish Jhunjhnuwala, founder and Managing Director of Ovolo. ”Ovolo is now applying a similar model and testing the market’s appetite for it, which could, quite possibly, start a trend.”
In January, Ovolo put up 28 flats for sale at the 222 Hollywood Road serviced apartment building in Sheung Wan at about HK$12,800 psf, or from HK$8.3 million to HK$12 million per flat. The building features 48 650 sq ft flats, with four units featuring terraces of up to 404 sq ft.
The launch has seen positive market response, with 167 viewings for the flats, said the company.
Buyers who allow the company to continue managing and leasing their units have been offered a guaranteed net yield of 3.3 percent annually for two years, paid quarterly. Those who intend to occupy the apartments will need to pay a management fee of HK$1,820 per month and will not receive any returns.
“Some owner-operators are selling their units for capital to expand their portfolio while continuing to manage the properties. It is a way to establish their brand name in the management market,” said Raymond Fung Ngok-chung, Investment Director of real estate consultancy firm Knight Frank.