Earlier this year, I blogged about the excitement in China generated by the news that its Dalian Wanda Group planned to invest $1.09 billion to build and operate a luxury hotel in London. At the time of their announcement (made in the summer of 2013), it was the first luxury hotel venture announced by a Chinese firm outside of China. Since then, Dalian Wanda has added a luxury hotel project in Madrid and, just this past summer, they advised Chicagoans they will open a $900 million skyscraper, the city’s 3rd-tallest building, on Lakeshore Drive East housing a 240-room luxury, 5-star hotel, luxury apartments and retail space in 2018. Additional US markets targeted by Dalian Wanda include New York, Los Angeles and San Francisco.
This is just the beginning. Recently, Anbang, China’s 8th largest insurance conglomerate stunned the hospitality community with its $1.95 billion acquisition of the iconic Waldorf-Astoria—the highest price ever paid for an existing hotel in the US. Not to be outdone, in October, China’s Sunshine Insurance Group Corp. invested AUS$463 million (about $399 million) in Sydney’s high-profile Sheraton on the Park, paying roughly $716,000 per room; and in November, Shanghai-based Jin Jiang International Holdings Co. purchased European-based Louvre Hotel Group for around $1.2 billion.
Hotels are not the only targets as Chinese investors explore investment opportunities abroad. Last year, the US food industry was abuzz by Shuanhui’s purchase of Smithfield Foods for $4.76 billion and, this past June, folks in Virginia took note that China’s Tranlin Paper Co. had invested around $2 billion in a paper and fertilizer plant that is expected to create 2,000 local jobs by 2020.
Over the past few years, Chinese money has flowed into the US, up from $58 million in 2000 to $14 billion in 2013. Overall, Chinese investment in the US now totals nearly $40 billion, and according to Deloitte, Chinese investors are now the 2nd largest foreign investor group, after Canada, in US commercial real estate with an 8% share of the total cross-border investment. As the South China Morning Post recently commented, Chinese investment in the US now exceeds American investment in China.
Propelling Chinese investment here and in other countries are forces that are nearly identical with those that lured Japanese investment overseas three decades ago. Fortune Magazine reports China now has excess savings ($4 trillion in foreign exchange reserves), making valuation of US and European assets attractive because to Chinese private investors, foreign assets deliver exceptional returns.
Read more at Forbes.