Bigger is better for Mainland Chinese luxury property buyer Chen Hongtian who purchased a Hong Kong home for USD271 million last week. His rationale for buying the 856 square meter house located at The Peak was reported in the press that he had outgrown his current property and needed to upsize.
During the week I was in Hong Kong and property agents along with the business community were buzzing over the historical-high transaction. Hongtian is a billionaire from Shenzhen whose ultimate view expressed in the press centered on the opinion the future of the Hong Kong real estate sector was rock solid and capital appreciation was a given in the market.
Capital flight from Mainland China is increasingly attracted to property and company acquisitions abroad given a slowing economy and rising internal regulation. On my flight home the front page of the South China Morning Post’s business section took an in-depth view of the Anbang Insurance Group who recently withdrew from the bidding of global hospitality chain Starwood recently.
One telling point in the article talking about why Chinese were making last minute plays for overseas mega transactions was the perception that other more experienced M & A firms who were also bidding had done their due diligence homework and that a simplified higher bid strategy following in others footsteps was a sound strategy. In other words, let others do the hard yards and come in at the final round to steal the thunder by means of paying a premium.
To sum up the wave of China buys is no easy task, be it intuition, a long term view of capital appreciation or just deal junkies gone wild, but expect more headlines in the property trade in 2016 to have a China element at play.
