, Hong Kong

Harbour Centre Development slashes Changzhou hotel book value by HK$543mn

Market oversupply and austerity measures cited.

According to Barclays, Harbour Centre Development (51.HK, NR), a 71% owned subsidiary of Wharf (4.HK, UW) announced at its FY13 results today that it is writing down its Changzhou hotel by HK$543mn today.

The Changzhou hotel is expected to open in mid-2014. Harbour Centre cited an oversupplied market and demand being impacted by government austerity measures and it expects pre and post opening losses for the hotel.

Here’s more from Barclays:

Earlier this week, sister company, Wheelock Properties (Singapore) (WP.SP, NR), also announced a S$110mn allowance for diminution in value for The Panorama (Ang Mo Kio). It cited weakening market conditions and a slow take-up rate for the property. Wheelock Properties (Singapore) bought the site for The Panorama in April 2013.

With the Hong Kong developers having enjoyed the past 10 years’ upcycle, we believe these two write-downs should serve as a wake-up call that asset values and earnings could go down.
 

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