The worlds’ biggest hotel operator Hilton Worldwide has sold the iconic Waldorf Astoria in New York to a Chinese insurance company for nearly $2 billion, a record for a US hotel. The deal marks the continued Chinese real estate shopping spree in America.
Hilton Worldwide Holdings sold the historic landmark to Beijing-based Anbang Insurance Group for a record breaking $1.95 billion, which is the largest acquisition of US realty by a Chinese buyer.
The hotel will still be operated by Hilton, but is expected to undergo major renovations in the coming years.
Opened in 1931 and offering some of the best views of the Manhattan skyline, the hotel is famed for its elite guest list from US presidents to celebrities like Marilyn Monroe and Elizabeth Taylor.
President Barack Obama books the Presidential Suite when he travels to New York City, following the tradition of every US president since Herbert Hoover. Next time the President stays at the hotel, it will be under Chinese ownership.
Made in USA, owned by China
The sale “will ensure that the Waldorf Astoria New York represents the brand’s world-class standards for generations to come,” President and CEO of Hilton Worldwide Christopher Nassetta said in a statement.
China will now own 121 Park Avenue, the latest acquisition in the East’s shopping spree in the West. China’s growing economy, stronger currency, and greater access to credit has enticed buyers to invest in the US.
“What we are witnessing is the greatest transfer of wealth in human history. America’s wealth, America’s productive capacity, the capital that has been accumulated over a couple of centuries of industrial growth, is being transferred to East. Asia and China in particular at a volume and speed that has never been seen before,” Curtis Ellis, Executive Director of the American Jobs Alliance, told RT.
Chinese insurers have more than $14 billion available to spend on real estate abroad according to a study by global commercial property and real estate adviser CBRE.
In Manhattan alone in recent years, Chinese investors have bought some of the city’s most famous buildings. Zhang Xin, the co-founder of China Ltd bought a stake in Manhattan’s GM building last year, and another Chinese company, Fosun International Ltd, picked up shares in the Chase Manhattan Plaza.
In 1989, Japanese Mitsubishi Estate Company bought a controlling stake in New York’s Rockefeller Center, also a staple in the city’s architecture.
Two is the limit
The Chinese realty boom in the US is that Beijing no longer permits individuals to own more than two properties in China.
China is the leading foreign buyer of US properties. According to the National Realtors Association, between March 2013 and March 2014, the Chinese spent $22 billion on US homes, with more than 75 percent of the purchases paid in cash.
The Chinese are also putting money into America’s most expensive homes that have an average price to half a million dollars. An average American house costs $200,000.
Chinese Firm Pays Record Price for Waldorf Astoria
The Chinese buyer has said it will invest in remodeling the famous property on Park Avenue to bring it back to its “historical grandeur.”
Reports say the deal is the largest for a Chinese company buying a U.S. building. Chinese investors increasingly have become interested in U.S. properties. Homes — especially costly ones — are considered a good investment. The National Association of Realtors says China’s spending on homes in the U.S. has increased sharply. The trade group estimates that Chinese buyers spent $22 billion on real estate properties in the twelve-month period ending in March 2014. That is an increase of 72 percent over the 12-month period before.
Chinese companies also increasingly are seeking businesses outside of the energy and raw materials industries. Last year, a Chinese company bought Smithfield Foods, the largest pork producer in the U.S., for nearly $5 billion.
China holds about $1.2 trillion dollars in United States treasury securities. While these investments are safe, they do not give high returns, or yields. China has increasingly looked for other ways to invest its huge trade surplus with the U.S.
For many years, Japan has had a large trade surplus with the U.S. In the 1980s, Japanese companies bought important U.S. properties. These included a controlling share of Rockefeller Center, also in New York, in 1989. However, not all of these investments made a profit.