By NEIL HARTNELL
Tribune Business Editor
China’s interest in downtown Nassau goes far beyond the potential British Colonial Hilton purchase, Tribune Business can reveal, having presented Prime Minister Perry Christie with a ‘Master Plan’ to redevelop Bay Street and surrounding areas.
Highly-placed sources confirmed to this newspaper that Chinese interests have developed their own EDAW-style comprehensive plan to revitalise the city of Nassau - involving their own real estate acquisitions and developments - and quietly presented this to the Government.
Tribune Business contacts close to the administration confirmed that talks between Chinese state-owned interests, likely China State Construction, and the Government have taken place, but the discussions are at an early stage and nothing has been agreed or decided.
“Discussions have taken place, but where they will go, I can’t say,” one source confirmed to this newspaper. “It’s still early.”
This came after other contacts disclosed to this newspaper the extent of the Chinese proposals for Bay Street’s potential revival, which has been slow to build momentum despite more than a decade of efforts, and both the provision of extensive investment incentives and the removal of the shipping industry to Arawak Cay.
“They’ve presented a very detailed plan to the Government,” a source said. “They’ve presented a master plan to do a major development, which is something similar to the previous one.
“They’re offering a plan for Bay Street, and want to do a lot more acquisitions on east Bay Street.”
The revelations shed new light on China State Construction’s interest in acquiring the British Colonial Hilton, which is widely regarded as the ‘economic anchor’ for downtown Nassau and Bay Street.
This newspaper understands that while the state-owned firm has yet to submit an offer, having completed its due diligence, one is anticipated imminently and the deal could move quickly within the next few weeks.
And, not surprisingly, given China’s ‘deep pockets’, sources said Mr Christie is understandably keen for the British Colonial Hilton sale to go through with China State Construction, given that it could usher in further investments that revitalise Nassau’s city centre.
“The Prime Minister wants a sale to happen,” Tribune Business was told bluntly.
This newspaper understands, though, that China State Construction may have competition for the British Colonial Hilton after a former bidder re-entered the race.
Sources close to developments confirmed that Roger Stein, who previously attempted to re-develop South Ocean, and formerly bid to acquire the British Colonial Hilton in partnership with global asset manager, Och-Ziff, has submitted a new Letter of Intent to buy the downtown Nassau property.
He is now understood to have partnered with a New York-based hotel group in a $60 million-plus offer, but the British Colonial Hilton’s current owners - Aubaine Capital and the Canadian Commercial Workers Industry Pension Plan (CCWIPP) - are thought to favour the expected Chinese bid.
Reaction to China’s proposed development plans for Bay Street/downtown Nassau was mixed yesterday, with some contacts expressing concern that this would give Beijing-owned and controlled interests too much power and influence in a small economy such as the Bahamas.
China State Construction, apart from being the main contractor for the $2.6 billion Baha Mar project, also has a $150 million equity stake in the project. And the Beijing-controlled China Export-Import Bank is Baha Mar’s main debt financier, having provided at least $1.9 billion to the development.
This effectively makes China owner, financier and contractor for the Bahamas’ second mega resort/casino development, which is being counted on to play the lead role in turning around this nation’s moribund economy and high unemployment rate.
Along with China State Construction’s interest in the British Colonial Hilton, it is also one of the remaining bidders on the Bahamas Electricity Corporation (BEC) restructuring. If successful, it would be a major player in the utilities and hotel industries - two of the major sectors of the Bahamian economy.
The US government’s reaction to a major expansion of Chinese investment and influence in the Bahamas will also be an issue.
China’s strategy is to find overseas investments to absorb its surplus dollar and foreign currency reserves, plus excess labour. This is also part of a geopolitical and economic strategy designed to complete for worldwide influence against rivals such as the US.
It has been able to drive a hard bargain, ensuring that at Baha Mar, the majority of work, labour and materials are all sourced from China. It is thus likely that similar terms would be sought on any downtown Nassau redevelopment.
However, other private sector sources said they would welcome a Chinese-led redevelopment of Bay Street, given that little progress had been made to-date despite the presence of the Downtown Nassau Revitalisation Act.
Like the Government, which is likely to be open to a Chinese offer given its eagerness for job creation and growth, one source said: “That would be magnificent.
“Up till now this has been a huge disappointment. The incentives have not worked. The Government and Central Bank have never created an environment where people can come in and feel comfortable for development. That has created a huge problem.”
The source added: “Things have been so bad, and the Government is so desperate to have good news. How do you create jobs and growth? One of the simplest things is right in front of them: To revive the City of Nassau.”