New York may be the most successful city at attracting Chinese real estate investment, but the progress of developer Shenzhen Hazens Real Estate Group in southern California underlines the appeal of the Golden State for mainland property fans.
Privately-owned Hazens has now started work on its third hotel in the Los Angeles area, after breaking ground on what will soon be the 288-room Sheraton San Gabriel earlier this month.
The San Gabriel project comes after Hazens last month announced plans to build a luxury W Hotel on the site of an existing venue that it bought last year. The developer’s growing suite of hospitality destinations is part of a series of real estate acquisitions by Chinese buyers along the western coast of the US.
Three New Hotels in Two Years
Hazen’s project in San Gabriel is located about 10 miles northeast of downtown Los Angeles and is expected to opening in 2018. With this latest hotel Hazen’s now estimates that it has committed $1 billion in investment across its three projects.
During August, Hazens and US hospitality group Starwood Hotels & Resorts Worldwide announced plans to build a three tower residential and retail complex on the site of the current Luxe Hotel near the Staples Centre in Los Angeles. The project along Figueroa Street is slated to open in 2019, and will be anchored by the 250-room 5-star W Los Angeles Downtown Hotel.
The Chinese developer bought the Luxe City Center Hotel, a former Holiday Inn dating to the 1960s, together with surrounding property, for $104 million last year. Once complete, the new Gensler-designed project will include 650 unbranded residential condos and 80,000 square feet (7,400 square metres) of high-end retail and restaurants.
In December 2013 Hazens made its maiden acquisition in the US by purchasing the 802-room Sheraton hotel near Los Angeles International Airport for $96 million. At the time of that transaction the developer said that it expected to spend an additional $30 million to renovate that property.
California Attracts $1.25 Billion in Chinese Capital
These latest investments by Hazens will add to a continuing flow of Chinese capital into California, that has led to more than $1.25 billion in major transactions led by Chinese buyers over the last two-and-a-half years.
According to leading Chinese outbound property portal Juwai, California is the most popular location for property searches among visitors to its site, outstripping New York or any of the Australian sites.
There have also been a number of large-scale Chinese investments into California property, including Oceanwide Holdings’ acquisition of a two million square foot (186,000 square metre) mixed-use project in San Francisco earlier this year. The Shenzhen-listed developer also spent nearly $200 million to acquire the Figueroa Central project in Los Angeles in December 2013.
In southern California, Shanghai’s Greenland Group is investing $1-billion to build the Metropolis condominium and hotel development, also near the Staples Center.
For real estate investments of US$50 million and above, California still trails far behind New York this year as a target for Chinese investors, according to data compiled by Mingtiandi. As of the end of July the Golden State had notched $356 million in China-sourced property deals this year, behind New York’s $2.6 million in equivalent transactions. For 2014, California had a total of $721 million in China-sourced deals, compared to the Empire State’s $2.1 billion in transactions by mainland investors.