At least two realtors have suggested that unless the Urban Development Corporation (UDC) lowers its asking price for the Oceana hotel in downtown Kingston, the property will continue to remain on the market without buyers.
The complex, located at 2-4 King Street, is being advertised for sale again, marking its third year on the market since its first placement in 2009. The corporation has set June 29 as the deadline for expressions of interest.
The UDC has declined to indicate the reserve price of the property. However, in 2011, former UDC general manager Joy Douglas indicated that bidders had at all times fallen below the asking price.
Edwin Wint, chief executive officer of La Maison Property Services Limited, said Tuesday that investors have indicated that the asking price does not reconcile with the market value.
"Until they fix the price point, the incentives won't be perceived as adding value," Wint said, referring to the tax incentive programme being offered by the Government to attract investors to downtown Kingston.
Issue of asking price
Anya Levy, realtor with Remax Elite, believes the reason the sale of the Oceania has been languishing for three years is because of the asking price.
"The only reason that a property would not sell when it has been listed since 2009 is … the price," she said. "Oceana is a unique product. There is no other multi-storey property in the vicinity. There is no competition and it could be used for anything including a training school, an information technology centre or go back to being a hotel," stated Levy, adding that it could also be turned into a strata property.
"The bottom line, however, is the price. Anything on the market which is not priced right is not selling. You have got to price the product carefully." Levy explained.
She suggested that if the valuation was done in 2008 it might have been hyperinflated. But she emphasised the utility of the property, noting that "there are a lot of things that can be done with Oceana".
Levy also said "the quality of the accommodation is a value proposition," a statement that should convince buyers that the property will add more value than other similar offerings.
The multi-storey edifice on the Kingston waterfront was built as a hotel but is now used as office space for the Ministry of Health. At one time, the UDC publicly stated its preference that prospective buyers of the property operate it as a hotel, as it was until its closure in the 1990s.
The building sits on 7,687.91 square metres (82,754.71 square feet) of land and has 12 floors with an area of approximately 20,664 square metres (222,129.44 square feet).
In June 2011, the former UDC general manager proposed the sale of the building in a package with other properties. The UDC is also selling its Office Centre Building at Ocean Boulevard, downtown Kingston.
The corporation did not respond to queries by the Financial Gleaner.
In the meantime, the corporation has been promoting the tax-break programme to attract investors to downtown Kingston.
Businesses which set up shop in the area can benefit from a tax incentive programme, which includes a 33.3 per cent tax credit on capital sums invested in developments.
Approved developers can also enjoy full relief from tax on any rental or lease income from improved property and exemption from transfer tax and stamp duty. The tax-incentive programme is an initiative by the Government to encourage and facilitate development in urban areas defined as blighted or in need of revitalisation.