Banyan Tree plans to use fund-based model to develop future projects

Singapore Exchange’s Mainboard-listed Banyan Tree Holdings said its first real estate investment fund has proven successful.

The luxury resorts developer plans to use the fund-based model to develop future projects in markets such as China and the Philippines.

Banyan Tree is tapping into its first real estate investment fund to finance the development of its Laguna Hue project in central Vietnam.

Its executive chairman said funding for the project will come from its Banyan Tree Indochina Hospitality Fund, which has raised about US$283 million.

Phase one of the project will cost about US$200 million and is expected to be completed in 2011.

Ho Kwon Ping, executive chairman, Banyan Tree, said: “If everything goes well, the world economy and our residential sales projects go well, we hope to start on phase two before phase one actually opens. The plan is still to have a relatively sequential development of the whole project.”

Banyan Tree said the anchor investors of the fund include some based in the Middle East and Hong Kong. Each anchor investor, including Banyan Tree, has pumped in US$50 million into the fund. The remaining US$83 million were contributed by other parties.

The resort developer remains upbeat about the outlook for the global tourism sector.

Mr Ho said: “Over the next 20 years, the number of people from China and India alone, leaving the developing world, who are going to travel the world, is going to be unprecedented.

“So if you take that large macro view and try to ride through all the crises which are going to come, my view is, fundamentally, this is going to be a huge growth business.”

Mr Ho said the company is also looking at other opportunities in central America. But those plans will be put on hold, given the current economic environment.

Source : Channel NewsAsia – 6 Aug 2009

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