Chinese investments are following their tourists abroad and investing in luxury hotel brands, real estate, and even yacht companies with expectation for a quick return in popular travel destinations.
Dalian Wanda Group, the Chinese developer controlled by billionaire Wang Jianlin, is investing 1 billion pounds ($1.6 billion) in a British yachtmaker and a London site to build Western Europe’s tallest residential tower.
Wanda will spend 700 million pounds on a 62-story luxury hotel and apartment building on the land on the South Banks of the Thames. It also agreed to pay 320 million pounds to buy 92 percent of Sunseeker International Ltd. whose yachts have been featured in James Bond movies, it said in a statement today.
“The bigger Chinese developers need to develop overseas markets as their domestic expansion is limited by the property curbs” on residential homes, said Zuo Hongying, a Shanghai- based analyst at AJ Securities Co. “And they’re fairly cash- rich.”
London has emerged as a haven for foreign wealth, with the pound’s decline attracting investors from Malaysia to Russia to developments like Battersea Power Station, where about half of the project’s apartments have been sold in overseas markets. Chinese developers, including China Vanke Co., also are expanding overseas to take advantage of demand for real estate abroad from increasingly rich nationals.
“Investments in London despite being perceived as much safer than Shanghai, still carry higher yields,” said James Macdonald, head of China research at Savills in Shanghai. “A weak sterling has made investments comparatively cheap for overseas investors, especially for Chinese.”
The pound has lost about 37 percent against the yuan since the middle of June 2007.
Wanda will erect the tallest residential building in Western Europe, at 205 meters (673 feet), on the site upstream from the Houses of Parliament, Stephen Vernon, executive Chairman of Green Properties, the seller of the site, said in an interview today. It is in one of the clusters where tall buildings can be constructed in the city in an area called Nine Elms, he said.
Western Europe’s tallest residential tower is the 190-meter HSB Turning Torso in Malmo, Sweden, according to the Skyscraper Center website of the Council of Tall Buildings and Urban Habitat.
The number of millionaires in China has climbed 4 percent from 12 months earlier to 2.8 million, according to the Hurun Research Institute’s findings this year.
“Chinese consumption, particularly high-end consumption is booming,” Wang told reporters in Beijing. Five of six private jets at a General Dynamics Corp. Gulfstream factory in the U.S., where Wanda bought a plane last year, were earmarked for China, he added.
Wanda plans to expand its investment in the U.K. and build luxury hotels in eight to 10 cities globally, Wang said. The company may announce more overseas investments next year, and investors will have a chance to buy Wanda shares in future, he said, without giving a time period for an initial public offering of the closely held company.
Manhattan was the top choice for Chinese investment in overseas properties in the past two years and $2.1 billion was spent, according to Real Capital Analytics data. London was in the No. 2 spot with total investment of $2 billion, the data show.
Wanda decided to buy Sunseeker because it is building three yacht clubs in China and each needs at least 10 yachts, Wang said.
Sunseeker sold about 190 boats in Asia, excluding Australia, in the past decade, with more than 60 percent of the purchases coming from China including Hong Kong, Gordon Hui, chairman of Sunseeker Asia said in an interview this month. A lowest-priced Portofino 40 cruiser costs about five million yuan ($815,000) and the most expensive model costs as much as 230 million yuan, Hui said.
Wanda, which last year bought U.S. cinema chain AMC Entertainment Holdings Inc. for $2.6 billion, is among Chinese companies seeking acquisitions overseas to gain foreign expertise, brands and technology. Shandong Heavy Industry Group- Weichai Group purchased Italian yacht builder Ferretti in 2012 and Zhejiang Geely Holding Group Co. bought Volvo Cars in 2010.
ABP (China) Holdings Group Ltd., a Beijing-based Chinese developer, last month signed an agreement with London officials to transform the 35-acre (14-hectare) site at Royal Albert Dock into the capital’s third business district after the City of London and Canary Wharf.
Malaysia’s SP Setia Bhd. and Sime Darby Bhd. bought the site of London’s Battersea Power Station, featured on the cover of Pink Floyd’s 1977 album “Animals,” for 400 million pounds in July last year.
Vanke, China’s biggest developer by sales, in February signed a deal with Tishman Speyer Properties LP, the owner of New York’s Rockefeller Center, to develop residential towers in San Francisco.
Wang, 58, is ranked 166, with a net worth of $7.4 billion, on the Bloomberg Billionaire’s list. He was born to a military family in western China’s Sichuan province and served for 16 years in the People’s Liberation Army before he was honorably discharged, according to Bloomberg Billionaires.
He later took a job at an indebted residential developer affiliated with the district government, changed the company’s name to Dalian Wanda and became the general manager in 1992. During the next 20 years, he developed Wanda into a diversified company with interests in commercial property development, tourism, entertainment and department store chains.
With assistance from Zhang Dingmin in Beijing and Michael Wei and Bonnie Cao in Shanghai. Editors: Anjali Cordeiro, Andreea Papuc, Stephanie Wong.