Last month, it was announced that Chinese insurance company Anbang Insurance Group (安邦保险集團 /安邦保險集團) purchased luxury hotel Waldorf Astoria New York (华尔道夫酒店 / 華爾道夫酒店) for a 1.95 billion USD, the largest ever paid for a hotel and the largest single-asset transaction in New York this year. Did they seal the deal over WeChat?
The seller, Hilton Worldwide Holdings Inc. will operate the hotel under its current name for the next 100 years. The new owner plans a “major renovation to restore the property to its historic grandeur”. The US government, who has accused the Chinese government of spying (and been accused themselves), has espionage concerns over the sale. It’s not just that Anbang’s founder and chairman Wu Xiaohui (吴小辉 / 吴小辉) is Deng Xiaoping’s grandson and its directors include Xiaolu Chen (陈小鲁 / 陳小魯) whose father, Chen Yi (陈毅 / 陳毅), was one of the Ten Marshals of the People’s Liberation Army, former Mayor of Shanghai, and former Foreign Minister and Zhu Yunlai (朱云来 / 朱雲來), son of former Chinese Premier Zhu Rongji (朱镕基 / 朱鎔基). The Waldorf Astoria is the home of the US Ambassador to the United Nations and hosts leaders and diplomats from around the world. Of course the Chinese know this. Deng Xiaoping himself stayed and met with Secretary of State Henry Kissinger at the hotel in 1974.
The acquisition of the property is part of a trend of Chinese real estate investment in United States that sees Chinese nationals as the top foreign buyers of property in the United States by value:
“According to the National Realtors Association (NAR) survey, the Chinese spent $22 billion on U.S. housing in the 12 months through March — 72 percent more than they spent the year before. Among foreign buyers, Canadians ranked highest in the share of transactions, at 19 percent, but the Chinese bought by far the most expensive homes, with a median price of over half a million dollars. That’s compared to the $213,000 spent by the average Canadian buyer of U.S. real estate, $141,000 spent by the average Mexican, and about $200,000 spent by the average American.”
In 44 states, they are in the top 5 of all foreign buyers. The boom in foreign real estate investment is due in part to growing wealth, government restrictions back home to tamp down corruption and property speculation, a desire to diversify investments, and a belief in the stability foreign investments. According to The Wall Street Journal,
“Real-estate agents typically divide buyers into four distinct groups: the super-wealthy buying properties upward of $15 million for personal use; those buying homes for a few million dollars, also for personal use; those purchasing investment properties, usually in the $1 million to $2 million range, to lease out; and those buying in bulk, as a commercial strategy.”
In New York City, high-profile properties in which Chinese have taken a significant stake include 1 Chase Manhattan Plaza, the General Motors Building (home of the Fifth Avenue Apple Store), and Park Avenue Plaza. Chinese developers, who have learned to manage large projects from experience at home, are involved with ground-up construction of properties such as a luxury condo buildings in Williamsburg at 429 Kent Avenue (with listings on China’s leading Chinese real estate site fang.com) and in Midtown Manhattan at 610 Lexington Avenue. The Greenland Group Co. will own a 70% part of the Atlantic Yards (now Pacific Park), a controversial development project in Brooklyn that began with the Barclays Center.
Queens, where you may have noticed a lot of Chinese people live, has also seen significant Chinese real estate investment.
Image: Chris Breeze via Flickr, licensed under Creative Commons. Edited by Andrew Shiue