China’s conglomerates splurge RMB 15 billion on acquisitions abroad
China’s overseas hotel acquisitions increased 30% in the Asia-Pacific region alone in the first half of 2014. Chinese investors have set their sights on investment opportunities in major world cities such as London, Paris, New York, Los Angeles, San Francisco, Vancouver, Sydney and Hong Kong.
The recent boom in outbound tourism is fueling Chinese companies’ appetite for real estate acquisitions abroad, according to Jones Lang LaSalle.
“China’s Ministry of Commerce has relaxed the rules for overseas investment, stimulating investors’ demand for investment opportunities in luxury hotels. Many Chinese companies perceive such moves as the first step to making a foray into overseas luxury real estate,” says Nihat Ercan, executive-vice president of Jones Lang LaSalle’s Hotel and Tourism Real Estate Investments.
China has become the world’s fastest growing tourism industry in recent years, with Chinese travelers making 98.19 million outbound trips in 2013, an 18% increase year-on-year. The trade deficit from China tourism in 2014 may exceed US$100 billion.
The market growth prompted companies such as China Vanke, Greenland Group, Anbang Insurance and China Life to zero in on overseas investment opportunities. Kai Yuan Holdings, expecting an increase in high-income Chinese guests, acquired the famed Champs Elysees Paris Marriot for 345 million euros in mid-October. Anbang Insurance made another high-profile acquisition with the purchase of New York landmark the Waldorf Astoria in the same month for RMB12 billion, a new record price in hotel real estate transactions.
According to Jones Lang LaSalle’s data, China’s overseas hotel acquisitions increased 30% in the Asia-Pacific region alone in the first half of 2014. Chinese investors have set their sights on investment opportunities in major world cities such as London, Paris, New York, Los Angeles, San Francisco, Vancouver, Sydney and Hong Kong.
Real estate groups including China Vanke, Greenland Group and Country Garden Group were the first to expand their portfolios overseas. Wanda Group joined the fray with an aggressive agenda of acquiring overseas hotels through buying hotel management companies.
Chinese enterprises’ hotel acquisition overseas picked up speed since 2013 with medium-sized Chinese enterprises such as Shenji International acquiring Vancouver Island Saanich Resort Hotel’s full equity and assets for CN$14 million in August 2013 and Yingli Group buying the L.A. Marriot for US$74 million in November the same year.(Translation by David)