Hyatt Hotels Corp. makes deal to place property within $1 billion mixed-use project
By PETER GRANT
The deal marks the latest step in Beijing-based Oceanwide’s first U.S. project, which is scheduled to open in early 2019 and includes 504 condominium units, a 166,000-square-foot galleria and a 700-foot-tall LED display.
Oceanwide, which also has businesses in the energy, education and media industries, has invested $1 billion so far in this and five other planned developments in New York, Hawaii, San Francisco and other cities, according toThomas Feng, chief executive of Oceanwide Plaza LLC.
The deal is the latest sign that Chinese investors increasingly have been picking up the slack as the U.S. construction and commercial-real-estate industries cool. Overall, construction starts in the U.S. are expected to increase only 1% this year, compared with 11% in 2015, according to a report released last week by construction-data tracking firm Dodge Data & Analytics.
Activity by Chinese and other foreign investors is increasing in a number of major cities including New York, Los Angeles and Chicago, according to Robert Murray, Dodge’s chief economist.
“In a market that has struggled to get going, the increased role played by foreign investment has provided a supportive element,” he said.
Other recent ground-breakings include one last month in Chicago on the 95-story Vista Tower by a venture of Dalian Wanda Group, one of China’s largest developers, and Chicago-based Magellan Development Group. Meanwhile, Shanghai government-owned Greenland Holding Group is developing a $1 billion project in Los Angeles and leading a venture developing thousands of units of housing in Brooklyn, N.Y.
Chinese investors have become more active buyers at a time when the commercial-real-estate sales market has been losing steam. They purchased or signed contracts to buy $12.6 billion of U.S. property in the first three quarters of this year, more than double the commitments for the same period in 2015, according to data firm Real Capital Analytics. In the same nine months overall investment declined 9.1% to $343.1 billion, Real Capital said.
Oceanwide launched its U.S. strategy in 2013 because it had a large amount of available cash, liked the market timing and found strong support among Los Angeles government officials, Mr. Feng said. The company continues to look for new investments in the U.S. and plans to spend about $10 billion here eventually, he said.
Park Hyatt, which is Hyatt’s top-tier luxury brand, has been looking for a Los Angeles location for more than a decade, according to David Tarr, a senior vice president with the company. He said it chose the Oceanwide site partly because of downtown Los Angeles’new residential, retail and entertainment hotspots, like L.A. Live.
“A decade ago downtown L.A. probably wouldn’t have fit the bill” for a new Park Hyatt, Mr. Tarr said. “Today it absolutely does.”
Original article from The Wall Street Journal