DEALS & DEVELOPMENT
New York ' s Waldorf Astoria was sold in 2014 to China ' s embattled Anbang Insurance Group Co .
New DEALMAKERS ?
R
Reined in amid scrutiny from Beijing authorities , Chinese buyers are retreating from outbound investment in hotels . What new investors might step in ? And as the Chinese trim their overseas portfolios , what will happen to asset values ?
Don ’ t count China out . “ We expect that Chinese capital is still available for hotel investment from investors with stronger balance sheets who are not under the microscope of the banking regulators ,” says Raymond Clement , Savills ’ managing di- rector , hotels Asia Pacific . Chinese property firms , which are not as highly leveraged , are likely to remain active , he adds . In Europe , more homegrown capital is emerging . “ We ’ re seeing more passive in- stitutional investors buying into the space ,” says Derek Gammage , non-executive chairman , EMEA , at CBRE Hotels Limited . At the luxury level , he says buyers from elsewhere in Asia are likely to take over where the Chinese are leaving off .
In Asia , private equity seems to be reemerging for both outbound and domestic investments , says Mike Batchelor , CEO , Asia , at JLL ’ s hotels and hospitality group . Buyers from Thailand are starting to make some noise beyond their borders , and investors in Hong Kong and Singapore are ready to pull the trigger as well , says Robert Hecker , managing director , Pacific Asia , at Horwath HTL . But these buyers tend to be more frugal than their Chinese counterparts .
The jury is out regarding the impact on prices . Five-star assets remain prized , several observers agree . And lack of hotels for
THE WALDORF ASTORIA NEW YORK
“ PRICES ARE UNDERPINNED by local buyers and private equity in any market .”
– LAURENCE GELLER
sale has kept prices competitive , Clement says . But seller price expectations have dropped a bit now that Chinese investors seem to be backing away , Hecker observes .
Over the years , Laurence Geller , chairman of Geller Capital Partners , has watched as S & Ls , insurance companies , pension funds , Japanese investors , private equity players and others have gone on spending sprees . “ The Chinese made a lot of noise on a number of fairly sizeable deals , and they drove prices up for certain properties , but they didn ’ t have any material effect on the industry ,” he observes . Ultimately , he says , “ prices are underpinned by local buyers and private equity in any market .”— M . R .
28 hotelsmag . com June 2018