Emperor International (0163) will turn the former Emperor Hotel in Happy Valley into a residential building with 260 rental units.
Executive director Donald Cheung said the group paid about HK$1 million of land premium to the government for the project, due for completion by 2023.
Construction cost would be almost HK$600 million, and the expected rental income more than HK$100 per square foot monthly.
He said the firm will continue seeking to acquire Hong Kong Island sites, and may bid for the Urban Renewal Authority's Hang On street redevelopment project.
The property development trend will become clearer in the second or third quarter after major developers announce pricing strategy for their new projects, Cheung said.
He also called on the government to raise the current maximum loan-to-equity ratio for mortgages.