The last time prices of commodities plummeted in 2008, Chinese buyers took wells iron ore, coal mines and other natural resources at knockdown prices. This time, Chinese investors rushed here to a different kind of bargain: the Sheraton on the Park, a five-star hotel overlooks a public garden in the center of Sydney.
Buy headquartered in Beijing Sol Sheraton Insurance Group Corp. for about $ 400 million in November is emblematic of a change taking place in the strategy of foreign investment in China. A thirst for natural resources is being replaced by a growing hunger among Chinese companies and the rich to acquire trophy assets and find homes for their money abroad individuals.
The SOEs that led the charge abroad in search of products to meet demand in the country have been overtaken by private equity firms, developers and insurance giants. Other recent targets include cinema chains and beach resorts on Australia's Gold Coast.
"What were motivated by era security of supply, but now as supply exceeds demand the heat of that particular argument is taken," said Mike Elliott, a global leader in mining and metals in EY, accounting and consulting.
The withdrawal of mining investment comes as once flourishing industry resources sliding faces Australia prices. Companies try to sell assets to raise cash are getting lowball offers, or none at all. The annual value of mining-related deals by Chinese companies in Australia fell by 80% from 2011-2014.
It is a change that is playing out worldwide. Investments outside China in metals and energy fell to $ 35.20 billion last year to more than $ 50 billion in each of the previous three years, according to a database compiled by the American investment Enterprise Institute and the Heritage Foundation. The total investment output in 2014 was, however, 0.7% more than in 2013, for a total of $ 84.37 billion, as investors spent more on other sectors.
China Investment properties increased to $ 15.72 billion in 2014 from $ 11.71 billion in 2013, and only $ 3.72 billion as recently as 2011.
Among the properties of trophies elected by Chinese buyers is the Waldorf Astoria in New York, which Anbang Insurance Group Co. bought earlier this year for $ 1.95 billion. Other active investors include China Oceanwide Holdings Ltd., which plans a tower will be one of the highest in San Francisco.
In Australia, property and entertainment giant Chinese Dalian Wanda Group Co. is the acquisition of an office building in Circular Quay-times of the famous Sydney Opera House in the city and harbor bridge and plans to spend $ 1 billion transforming in a hotel and apartment tower.
Wanda last year acquired a draft beach hotel in the coastal resort town of Surfers Paradise, on the Gold Coast east of Australia.
Chinese companies are still likely to buy certain assets of commodities, but not in the areas of oversupply as iron ore. UBS AG expected to iron ore, the overall surplus of annual production in relation to demand will increase to over 200 million tonnes-triples annual South Korean imports by 2,018.
People working with Chinese investors say their interest is more likely to be bitten by metals such as copper, nickel and gold, which foresees a great demand as China's economy shifts towards more consumer-led growth .
Both Barrick Gold Corp. and Newcrest Mining Ltd. are looking for potential buyers of gold mines here, while BHP Billiton says its Nickel West operations are not part of its strategic future.
While Chinese buyers are paying top dollar for shining urban towers, much as they did to the coal mines, which are driving harder bargains for mining assets.
"As China slows, the desire to bid and bid at any cost in the mining sector has also declined," said David Ryan, a corporate partner of the law firm DLA Piper.
Yingsheng Wang, deputy secretary general of the China Iron and Steel Association supported by the state, said the slower economic conditions in the country had limited funds for large investments. "Steelmakers may simply not take money to invest as easily as they could in the past," Wang said.
Offers in the past have been costly. Projects acquired at high prices for a commodity boom decadelong have been marred by delays and high profile blowouts costs. In 2013, the president of the China Mining Association estimates that 80% of all mining agreements abroad had failed, according to state media.
Massive Sino Iron project in Western Australia Ltd. Citic attracted widespread attention because of exorbitant costs and environmental problems, while a foray into Australia by Yanzhou Coal Mining Co., through the local unit Yancoal, resulted in a series against losses and asset write Downs.
Even if prices of raw materials are recovered, Chinese buyers will be more careful. "I do not think I would rout we have seen in recent years," said Mr. Elliott EY.
On the other hand, bankers are ample for Chinese investment in other sectors to accelerate. In October, the Ministry of Commerce of China relaxed red tape for companies investing abroad.
"The Chinese have a different way to invest in other sectors, such as real motivation," said Les Koltai, Australian real estate director at DLA Piper, who advised the private equity firm Blackstone Group when it sold the Sydney Tower Dalian Wanda .
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