Shanghai Private Equity Group Said Buying Sydney Hotel for A$140M

Shanghai United Real Estate Investment, a private equity firm set up by a team of mainland investors and developers, is said to be on the cusp of buying an Intercontinental Hotel in Sydney from its Singaporean owners for A$140 million ($104 million), according to a report today in the Australian.

The investment group, which was set up in Shanghai’s free trade zone in 2015, would be adding the 140-room Intercontinental Sydney Double Bay to its portfolio of five Australian projects and a South Korean resort that it has invested in during the 23 months since its inception.

The acquisition by Shanghai United (上海连合房地产投资有限公司) would provide an exit for Singapore’s Royal Group, which purchased the former Ritz Carlton in Sydney’s glitzy Double Bay area for a reported A$60 million in 2013. The hospitality investment specialists have said that they have since put another A$100 million into renovating the property, which had stood vacant before the 2013 deal.

Second Hotel Deal for Shanghai Group

Should Shanghai United follow through with its $104 million purchase, it would value the hotel, which is best known for its unfortunate role as the site of INXS frontman Michael Hutchence’s death in 1997, at $742,000 per key.

The purchase would be the Shanghai investment group’s second major hotel deal in the last year, after the group backed transplanted Chinese developer Visionary Investment Group’s A$130 million purchase of a site at Bathurst and Castlereagh Streets in Sydney’s central business district in 2016. Shanghai United and Visionary have since formed a partnership with hospitality giant Accor to operate a boutique hotel on the site under the French group’s MGallery brand.

Royal Group, which has a portfolio of hotels in Australia, Singapore and other southeast Asian countries, had reportedly put the hotel for sale last December at an asking price of A$150 million. The company also owns the Singapore Resort and Spa on Sentosa Island and the Sofitel So on the city’s Robinson Road.

Chinese Developers Plan to Spend A$2B on Aussie Real Estate

In Australia, Shanghai United has said it has bigger plans for its partnership with Visionary Investment Group and for Australia.

The private equity firm, which is backed by 10 mainland developers, intends to invest as much as A$2 billion in Australia over the next three to five years, according to an interview last year with The Australian.

The group, which invested in four residential projects in Australia last year, is made up a group of small to mid-sized developers and investors, and is chaired by Zobon Real Estate Group (中邦置业集团有限公司) head, Wei Ping. Also last year the group invested in an integrated resort project on South Korea’s Jeju Island, which has become a centre for mainland real estate deals.

Like most of the participants in Shanghai United, Wei’s Zobon is not well-known outside the mainland market, but has developed hotels in Zhuhai as well as residential, commercial and industrial projects in the Yangtze River Delta and in Guangdong province.

Also said to be among Shanghai United’s investors is billionaire He Zhiping, who also owns a stake in Wang Jianlin’s Dalian Wanda Group. While common in western countries, shared pool and fund investments are relatively rare for China’s rich and powerful, who typically prefer to invest on their own, rather than trust independent fund managers.

Other participants in Shanghai United, according to the firm’s website, include principals of China Huajian Investment Holding, Hua Fang Group of China, Shanghai Dong Yuan Real Estate Development Group, Shanghai AIFA Estate Operational Development, Shanghai Jian Ling Property, Shanghai Nanyuan Property, Shanghai Yi Zhang Investment Management, Shanghai Hua Chen Investment and Shanghai Zhongtong Licheng Investment.