HONG KONG (BLOOMBERG) - Hotels in Hong Kong are being transformed into residential developments to satisfy housing demand as the pandemic-hit tourism industry shows no signs of recovery.
Property developers and the government are both looking to repurpose hotels in the city, where apartments are in short supply.
Tycoon Victor Li's CK Asset Holdings Ltd is leading the trend, with plans to convert two of its properties.
The developer got government approval to transform a hotel in the Ma On Shan area into 758 apartments on Feb 26. Another of its hotels, in the New Territories, is set to provide more than 5,000 homes after its conversion was greenlit late last year.
Mid-sized developer CSI Properties Ltd is converting a hotel in Jordan for office and residential use. The city's planning department approved its application on Feb 26.
The government is allocating HK$95 million (S$16.38 million) to subsidise 800 hotel and hostel rooms for local families over the next two years.
It is currently in discussions with more than 10 hotels and hostels over temporary housing for the underprivileged, said Mr Frank Chan, the Secretary for Transport and Housing, in a blog post published in late February.
The units will act as transitional housing for eligible residents awaiting public housing apartments.
Converting hotel rooms makes sense for Hong Kong. As in much of the world, the city's tourist industry largely ground to a halt last year, with a drop of more than 90 per cent in the number of travelers in 2020 from a year earlier.
Hotels have largely had to rely on local customers and travellers waiting out quarantine for business.
However, demand for residential properties in the world's least affordable property market remains strong. Wealthy residents still queue up to purchase new properties, while the poor are in desperate need of public housing.
The pandemic has cost many families their jobs, making it harder for them to afford proper homes.
"Also affected by the pandemic and the economic downturn are low-income families living in subdivided units waiting for public housing," Mr Chan said in his blog post. "Unemployment or underemployment add to their burden, making the demand for transitional housing even greater."