China’s Sunshine ­Insurance Group pays $296m for New York hotel

Wei Gong Zhang is planning to acquire assets in ­Europe Source: News Corp Australia

NEW York’s Baccarat Hotel has yet to check in a single guest, but it is about to become the most highly valued hotel in the US after a Chinese insurer, Sunshine Insurance Group, agreed to buy it for more than $US230 million ($296m).

SIG is paying real estate mogul Barry Sternlicht’s company and a partner more than $US2m a room for the Midtown Manhattan property, after recently buying Sydney’s Sheraton on the Park Hotel for $463m.

The valuation of the New York property beats the previous record set by the Plaza Hotel, the New York landmark sold in 2012 to India’s Sahara Group for $US2.04m a room, according to data tracker STR Analytics.

The Baccarat is the latest trophy property to wind up in the hands of Chinese investors in ­recent months as buyers take ­advantage of new rules allowing them to invest more easily abroad. Real estate brokers and analysts said Chinese companies viewed luxury hotels, especially in major global capitals, as long-term investments that could provide steady income in a period of low interest rates. Some said the properties conferred prestige on their owners.

“Chinese insurers are buying for 50 or 100 years, and they are not worried about value going down in markets like New York,” said Ryan Meliker, hotel analyst for investment bank MLV. “It’s a great place to park money long term.”

Fresh from its acquisition of Sydney’s Sheraton on the Park Hotel in November, SIG is also buying the 100-suite Chateau Elan property in the NSW Hunter Valley, which comes with an 18-hole golf course and extra land holdings SIG plans to develop.

In a rare interview last week, SIG chairman Wei Gong Zhang told The Australian the insurer wanted a global spread of assets that were strong performers, and it would also buy in ­Europe.

China’s Anbang Insurance Group recently agreed to pay $US1.95 billion to Hilton Worldwide Holdings for the Waldorf-Astoria on New York’s Park Avenue. China property investor Dalian Wanda Group last year put $US900m towards a Chicago skyscraper with a luxury hotel.

Real estate broker JLL estimates Chinese companies will spend more than $US5bn on overseas hotel investments this year, up from $US920m last year and $US130 m in 2012.

Beijing’s recent liberalisation of rules limiting corporate investments abroad was helping to fuel the buying, said Gilda Perez-Alvarado, head of the Americas for JLL’s global hotel group.

Under the new rules, Chinese firms can invest up to $US1bn without seeking government approval, up from $US100m before.