The Real Deal Miami

Why Barry Sternlicht isn’t investing in China anytime soon

“I always think of China as a company masquerading as a country."

October 15, 2015 06:00PM

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From the New York website: Barry Sternlicht isn’t China’s biggest fan.

The Starwood Capital Group chair and CEO was on Bloomberg this week when the topic of the world’s second largest economy came up. While Starwood has invested in China in the past – namely in a Chinese hotel company and a Beijing office building – Sternlicht said his firm hasn’t tapped into the market “in four, five years now.”

When asked why, Sternlicht cited reservations regarding the country’s “rulebook” on foreign investment. “I know I can get in, [but] I’m not sure I can get out when I want to get out,” he said.

“I always think of China as a company masquerading as a country,” Sternlicht added. “There are rules that I’m not sure foreign investors should trust.”

Sternlicht also said that from a real estate investment perspective, Chinese interest rates “are not that low, so you have the inverse of the U.S. where if you’re buying really good real estate, you might find that the yield on the property is lower than the cost of debt.” That, he noted, “is one of my red lights in investment – don’t do that.”

Sternlicht was part of the joint venture that developed 1 Hotel & Homes in Miami Beach earlier this year. In June, a Starwood affiliate paid $17 million for a waterfront lot on North Bay Road.

Hear what else Sternlicht had to say in the video above. [Bloomberg]Rey Mashayekhi