Aug 29, 2013 | Jones Lang LaSalle Blog
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Nowadays, many poor-performing or abandoned factories have been turned into shopping malls, F&B outlets and art centres. In China, revitalisation commonly refers to the renovation of historic houses into chic and fashionable shopping and F&B space. Shanghai Xing Tiandi is one of the most notable of these projects and there are many duplicates in other cities in China. In Hong Kong, revitalisation happens to vacant old industrial buildings left unused due to the relocation of manufacturing to China. Most revitalised buildings in Kowloon are renovated into office, retail or hotel space. But in Hong Kong it’s hard to find any projects with special historic or other significance, Taiwan also does not have many historic houses that can become another Xintiandi, and revitalisation commonly applies to poor-performing properties.
A hotel project that has caught my attention is the AMBA Taipei Ximending Hotel. When travelling to a new city, I always prefer to stay in a local hotel rather than in an international chain hotel. Although international hotel chains deliver the same standard of comfort and luxury worldwide, local boutique hotels can often surprise guests with their interpretation of culture.
This hotel project has revitalised a poor-performing department store. The property first opened in the 70s and was one of the most popular department stores among families and young people, but due to competition and new shopping areas, it closed after 25 year of operation. Thereafter the property became dull and dreary although it was in a prime location.
It was re-opened in 2012 when the Taiwanese operator collaborated with some of Taiwan’s best architects, artists, music stylists, and interior designers to create the AMBA hotel. It targets business and leisure travelers and was shortlisted in as one of the best business hotels from Wallpaper* magazine in 2012.
Source: Quarterly report, Cathay No.1 Real Estate Investment Trust
Additionally, the rent is lower because the property has been such a poor performing asset and this helps the hotel operator to save on monthly expense. A percentage of the hotel revenue is paid to the landlord in lieu of rent annually and this is a situation that benefits both developer and hotel management.
Revitalising property can be fun. Transforming a vintage class property into a lifestyle shopping mall is chic and correct positioning can transfer a poor-performing department store into a modern and sophisticated hotel and make the property shine again.
Howie Wang is the Manager of Research for Jones Lang LaSalle in Hong Kong.
Source: Jones Lang LaSalle