How Asia’s old buildings are changing with the times

 —  Article by JLL Staff Reporter
old converted warehouse in Japan
Image credit: Shutterstock

It’s Friday evening in Bangkok and a crowd has gathered at Warehouse 30, the latest project by celebrated architect Duangrit Bunnag.

In the sprawling 4,000-square-metre space, fashionable locals flick through the glossy pages of coffee table books at Candide, a design-centric bookstore, shop for vinyls at Copperwired, or flesh out ideas for savvy tech-startups in the co-working space. When the curated space opened in 2017, it quickly became one of the hottest places in town to see and be seen. Only a few years before, however, the entire complex had been nothing more than two abandoned World War II-era warehouses.

Across Asia, former dilapidated spaces like Warehouse 30 are finding new life as hotels, in-demand office buildings, and trendy, multipurpose cultural salons. In 2014, Hong Kong’s old Police Married Quarters (now known as the PMQ) morphed into a bustling arts hub full of independent galleries and shops.  Two years later, architecture firm MVRDV Asia unveiled a state-of-the-art office bloc housed in what was once the Kwun Tong factory in Kowloon. And in Asian cities from Myanmar to Melaka, many of their old colonial buildings have been transformed into boutique and high-end hotels.

“It’s a trend that started in the West but has made its way to the Far East. In a city like Hong Kong or Singapore, you tend to run out of land space quickly,” says Yiuchi Mak, Director of Cost Management for Asia-Pacific at Jones Lang LaSalle. Yet even as real estate prices in these cities have gone through the roof, gritty warehouses and old office structures have lingered, creating less desirable neighborhoods. So, governments are trying to encourage adaptive re-use.”

Asia’s rapid expansions

Developers are increasingly taking an interest in repurposing space; while in the past they would not have hesitated to demolish old buildings, these days, some are thinking twice before unleashing the wrecking ball. Much of this has to do with a growing appreciation in Asia Pacific for cultural heritage and how such structures could be good for investors, business and tourism.

“When you go around the world, everywhere is starting to look more and more the same. You walk into a mall in Dubai, Hong Kong or London and you see the same brands,” Mak says. To counter the growing global homogeneity and to attract affluent tourists, Asian cities are seeking to highlight what makes each destination distinctive. Heritage structures provide a distinct sense of place and authenticity. “People go traveling because they want to experience another culture or have a sense of tapping into the identity of a place,” Mak adds.

Hotel operators have taken note, with big name brands eyeing older office structures and industrial spaces across Asia’s rapidly growing cities. In Guangxi, China, a 1960s sugar mill complex has become a new high-end resort under Alila Hotels while in Singapore the riverfront Warehouse Hotel started life as a spice warehouse and in Japan rapidly growing tourism and space constraints in Tokyo led Marriott International to transform an old 10-storey corner office block into a 205-room hotel.

Yet not all cities need more hotels. In others, such as Beijing, office space is in short supply – and its old hotels are being converted to meet demand from domestic and international firms.

A shortage of Grade A office buildings remains a big concern in Beijing, particularly in CBD areas. For this reason, some developers are converting hotel properties into shared offices to achieve a higher return on investment and release the supply pressure,” says David Marriott, Senior Vice President – Hotels & Hospitality Group, at JLL Asia Pacific.

Meeting city demand quickly

In Asia’s big cities repurposing structures is key to enable them to evolve to meet their current needs. In order to encourage conversions, governments have introduced revitalization schemes, according to Mak. Hong Kong’s Development Bureau has offered subsidies and nil waiver fees for change of use to several such projects in recent years, which has made them all the more enticing to investors—and it’s not the only reason. Aside from the inherent value in preserving a city’s unique character, repurposing old spaces can come with financial benefits.

“Repurposing a building could take a year to 18 months but knocking it down and rebuilding it could take three or four years,” Mak says. “Time is not a factor that should be overlooked in a cost-benefit analysis. Quicker turnaround means quicker return on investment, and that often makes a strong business case for investors.” In Hong Kong, following the government’s announcement to review the industrial building revitalization policy, capital values of warehouses climbed in the fourth quarter of 2017in tandem with the broader industrial market, up 0.5 percent.

Equally, repurposing abandoned buildings is a more environmentally friendly option; demolishing old structures requires energy and produces an enormous amount of waste, much of which ends up in landfills. According to Paul Kember, one of the lead architects at KplusK Associates responsible for converting a 1976 Hong Kong warehouse into the Ovolo Southside hotel, the firm saved an estimated HK$60 million thanks to a government premium waiver, HK$80 million on construction costs, and 21,000 tonnes of CO2, all simply by repurposing.

With Asia’s cities facing the challenges of rising populations, a shortage of space and increasing land prices, more existing buildings could join the growing list of structures finding a new place in their urban environment. “I certainly expect this trend to continue,” Mak says. “By breathing new life into these old assets, from a government point of view, you make the city a better place.”

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