HK Group Invests $1.9B in Dubai and Bets on 12 China Senior Homes

A little-known Hong Kong company has agreed to invest US$1.9 billion to turn around a stalled Dubai property project, and sell off pieces of it to Chinese investors.

At the same time, the Dubai-based firm that lacked the funds to complete a $6 billion project on its own turf, has announced that it will team with the Hong Kong-firm and a Chinese government ministry to develop retirement homes in China.

Pearl Dubai, the developer behind a delayed $6 billion, 1.86 million square metre mixed-use project in the United Arab Emirates, announced last week that it had sold a large part of the development to Chow Tai Fook Endowment Industry Investment Development (CTFE).

(CTFE is not related to the well-known jewelry retailer controlled by Hong Kong billionaire Cheng Yu-tung, but has a similar name to his Chow Tai Fook brand, and the tycoon’s involvement has been widely misreported).

The assets acquired by CTFE in the unfinished project include serviced apartments, high-end residences and two five-star hotels. Part of the assets will be held by CTFE and the remainder will be resold to ‘high-end clientele in the Far East seeking good rental returns as well as property value appreciation,’ Pearl Dubai said in a statement.

A Delayed Pearl

CTFE’s acquisition represents a bet that Dubai’s property market has recovered and that Chinese investors can profit from it.

The assets are part of the Dubai Pearl project, which was originally launched in 2008 and has been slowed for years by the region’s real estate market crash of 2008-2010. As the market has begun to recover, with prices climbing 20 percent last year, and the Dubai Pearl is now said to be on schedule for a 2017 completion date.

A report earlier this year in the Shanghai Business News predicted that Dubai’s recovering market would attract Chinese real estate investors who are looking to diversify their holdings away from China and are seeking high rates of return.

Reciprocal Deal

In a seemingly reciprocal deal, an investment consortium keyed by CTFE and Pearl Dubai announced two days after the Dubai real estate investment was revealed, that they would be teaming up with the China Ageing Development Foundation, a fund belonging to China’s Ministry of Civil Affairs, to build 12 high-end retirement and health resorts to benefit China’s aging population.

In a reply to questions from the South China Morning Post, the consortium commented,

“Population aging in China is expected to lead to a burgeoning demand for aged-care services over the next 40 years. It is now recognised that the ageing of China’s population will have far-reaching implications for society, for the economy and for the ability of the government to meet the expectations of the community,”

The consortium indicated that the three partners would develop eight projects in China and four overseas within the next six years, with the first development slated for Dubai.