Nanaimo officials have unanimously approved a development permit for a China-backed downtown hotel development worth an estimated $50 million.
Mayor John Ruttan and city councillors also voted to approve a 10-year tax exemption for the project, which could break ground as early as spring 2014,
The project is a proposal brought forward by SSS Manhao International Tourism Group, a subsidiary of Suzhou Youth Travel Services Co. Ltd., a major Chinese tourism and travel company.
The developer has said the 21-storey, 240-room luxury development would be a landing pad for 70,000 tourists a year visiting Vancouver Island.
The Nanaimo project is the latest in a string of transactions involving Chinese money buying B.C. hotel properties.
Next up is likely to be Tofino’s Pacific Sands Beach Resort. Forebase International Holdings Ltd., which announced plans to buy Brentwood Bay Resort for $14 million in September, is a leading contender to buy the Tofino property.
Forebase’s head office is in Chongqing, China. Founded in 1996, the group was established with hotel real estate development as its focus.
Other potential bidders include Adestra Hotel Group, which bought Harrison Hot Springs Resort and Spa for $32.3 million in June and is owned by Guo Qing Zhang, who lives in Vancouver and China.
Chinese buyers are also snapping up smaller properties to capitalize on B.C.’s rapidly growing number of Chinese tourists.
The Days Inn in Victoria and both the Delta Vancouver Airport Hotel and the Comfort Inn in Richmond sold to Chinese buyers in the past couple of years. Victoria’s Huntington Manor similarly transferred recently into Chinese hands.
“This truly is a trend,” said Chemistry Consulting Group CEO Frank Bourree. “What’s surprising is how many hotels Chinese investors have managed to buy in such a short period of time.”
Bourree said the trend is fuelled by sustained growth in the number of Chinese tourists in B.C. and the perception that the 288,000 Chinese citizens who visited Canada in 2012 are only the tip of the iceberg.
Chinese visits to Canada last year have increased 80 per cent since 2009, the year before China granted Canada approved destination status, and airlines continue to ramp up the number of direct flights between Vancouver and mainland China.
“There’s a lot of new wealth creation in China that is causing people over there to want to redeploy some of their capital into North America for a number of reasons,” said DTZ Victoria Real Estate broker Randy Holt, who managed the Brentwood Bay Resort sale.
“They view Canada and B.C. as a good place to invest generally.”
Angus Wilkinson, who is a hotel consultant and the retiring principal of Tyne Hospitality Services Ltd., agreed.
He added that offshore investors have yet to buy downtown Vancouver properties. Hotels such as the Fairmont Pacific Rim and Shangri-La Vancouver have owners whose money originated in Hong Kong, but Wilkinson said principals at those companies now also live in Vancouver.
He believes that part of the hotel-buying spree is due to vertical integration.
Chinese companies that are in the travel agency business increasingly want to have their own hotels for guests to stay in North America.
Where those resorts do not exist, Wilkinson said they will build them.
For more on China investments in B.C. hotels, see the December issue.
