Excelsior Sale Flop a `Reality Check' for Hot Hong Kong Property

(Bloomberg) -- The scrapped sale of The Excelsior hotel in Causeway Bay may have been a “reality check” in a heated Hong Kong property market, according to Irene Lee, chairman of Hysan Development Co.

“We didn’t get it -- or we didn’t bid,” Lee said in a Bloomberg Television interview Wednesday, refusing to confirm local media reports that her firm had been among those vying for the hotel on Lot No. 1, the first land auctioned in Hong Kong in 1841.

A cycle of ever-increasing expectations for commercial property values was fueled by the record HK$23.3 billion ($3 billion) fetched by the Murray Road car park building in Central in May, according to Lee. “Maybe we’re having a mild reality check,” she said, adding that China’s move to rein in some aggressive purchasers of overseas assets, such as HNA Group Co., may also have weighed on sentiment.

As the largest commercial landlord in Causeway Bay, Hysan owns the Lee Gardens and Hysan Place retail and office properties. The firm teamed up last year with developer HKR International for a rare foray into residential development, buying land in Tai Po.

Describing the property market as “quite hot,” Lee said developers needed to be sensible and not get “carried away.” At the same time, she expects an “adjustment” or a “normalization,” not a 1997-style property crash, adding that Hysan will continue to bid for residential sites when “the numbers work for us.”

Mandarin Oriental International Ltd. last month scrapped the sale of The Excelsior, saying that bids for the 869-room hotel failed to meet its expectations and it would review options including redevelopment into a commercial property. Local media reported that the bidding level for the property could be about HK$30 billion.

Lee’s an independent non-executive director of HSBC Holdings Plc, Hang Seng Bank Ltd. and Cathay Pacific Airways Ltd., among others, and is also the chair of 30% Club HK, an organization pushing for more women on corporate boards. “Hong Kong really hasn’t moved very far and it’s very distressing really,” she said, adding that “most boardrooms, everywhere” had similar problems.

In April, her re-appointment as an HSBC director was controversial, when a proxy shareholder adviser said she was sitting on too many boards. In total, 28.8 percent of votes opposed her reappointment. Lee said HSBC’s board was “very supportive” of her and she argued that critics of so-called “overboarding” needed to consider the capabilities of individual directors and whether they could contribute across multiple boards.

To contact the reporters on this story: Stephen Engle in Beijing at sengle1@bloomberg.net, Paul Panckhurst in Hong Kong at ppanckhurst@bloomberg.net.

To contact the editors responsible for this story: Sree Vidya Bhaktavatsalam at sbhaktavatsa@bloomberg.net, Peter Vercoe