Chinese Billionaire Cruises to Yacht Clubs From Property

Smoking a Cohiba cigar inside his suite at the Visun Royal Yacht Hotel, billionaire Wang Dafu, the chairman of property developer Visun Group, gazed down at the marina he built on southern China’s Sanya Bay and described his perfect day.

“I’d work in the morning and cruise the sea on my yacht in the afternoon,” said Wang, 47, who owns a 72-foot (22-meter) Pershing boat that he bought from Italy’s Ferretti Group in 2008 for $5 million. “When the anchors are dropped, you enjoy the solitude, which helps to solve problems at work.”

Wang, who has a net worth of at least $1.2 billion, according to the Bloomberg Billionaires Index, amassed his fortune building apartment complexes and hotel resorts in China’s Hainan and Guangdong provinces.

To offset a decline in housing demand brought on by China as it tries to rein in home prices that have almost tripled since 1998, Wang has turned to building yacht clubs amid a rise in affluent Chinese embracing Western sailing culture.

“Prospects for Hainan’s property market are dim, so it makes perfect sense for Wang to shift to yachts, which also seems to be his biggest love,” said Huang Hong, a Haikou-based researcher at Centaline Property Agency Ltd., China’s biggest real-estate brokerage.

Royal Yacht

The Shenzhen-based company has invested more than 800 million yuan ($130 million) since 2005 building Visun Royal Yacht Club in Sanya, a coastal city on a tropical island about 400 miles (644 kilometers) southwest of Hong Kong. The club is one of China’s largest marina operations, with 216 berths and more than 700 members.

“I’m very bullish on yachts and have quite big dreams,” Wang said, wearing a white t-shirt and pants. “I spend 80 percent of my effort in the yacht business, but I make 20 percent of my money out of it. In the future, the ratio will be reversed.”

Visun’s second yacht club, which will have 400 berths, is expected to open in Shenzhen by the end of 2013, Wang said. He wants to build another three clubs in the next eight years in locations such as Shanghai and Fujian, he said.

Closely held Visun Group has 10 billion yuan in total assets, two-thirds of which are property, according to Wang. The property development operation is valued at $550 million, according to data compiled by Bloomberg, based on the average price-to-book value of three publicly traded peers: China Vanke Co., Gemdale Corp. and Poly Real Estate Group Co.

‘Huge Correction’

The company’s hotel management business is valued at about $650 million, based on the average price-to-book value of three publicly traded peers: Marriott International Inc., Starwood Hotels & Resorts Worldwide Inc. and Wyndham Worldwide Corp.

Wang has never appeared on an international wealth ranking, and he could lose his billionaire status if China real estate prices falter. He declined to give further financial information about the company, apart from saying “the numbers don’t look good,” referring to the financial results of Visun property business in 2012.

Michel Goget, Ritz-Carlton Sanya’s general manager and chairman of the city’s Tourism Association, said in April 2012 that the city will face a “huge correction” in 2013 and 2014 because there’s an oversupply of hotel rooms.

Trading Socks

Wang got his start trading products such as televisions and socks in the 1980s in Shenzhen, a Chinese city neighboring Hong Kong. There was a shortage for all of his products in China at the time, as the country embarked on economic reform.

“I have never questioned my business capability, but I did doubt if I will ever have the opportunity, which is more important,” Wang said.

China’s then-Premier Zhu Rongji began privatizing state-owned housing in 1998, transferring home ownership from the government to the families living in urban apartments. A year later, Visun began construction on its first residential building in Shenzhen.

Since then, the company has built a vacation home project in Shenzhen, as well as residential and hotel complexes in Haikou and Sanya.

Wang said he took his first ride on a yacht in the late 1990s. In 2005, he decided to build his yacht club near a Visun development called Times Coast in downtown Sanya.

Other company executives objected, and Wang pushed ahead with the development anyway, believing building yacht clubs could offset future declines in property growth. China began implementing policies, such as increasing the down payment requirements to buy a home, in 2011 to curb speculation in the housing market.

International Tourism

The country unveiled a plan in 2009 to develop the southern Hainan province, where Sanya is the second-largest city, into an international tourism destination. Temperatures on the Hainan island averages 75.2 degrees Fahrenheit (24 degrees Celsius) throughout the year, making it attractive for travelers from China and abroad. That bodes well for yachting, according to Wang.

“Sanya is blessed with its natural conditions and it is the perfect place to develop a yacht club business,” said Wang, who compares it to Darling Harbor in Australia.

A 20-year membership at the Sanya marina, which opened in 2008, now costs 1.18 million yuan. The company also invested 380 million yuan to set up Hainan’s first jockey club in 2012. Visun, which organizes the 2013 UIM Class 1 World Powerboat Championship Grand Prix, also owns a wine club and a sports car club in Sanya.

Wang, a member of provincial legislative body in Hainan, said he spends three months a year traveling around the world and has seen most of the planet, including the North Pole.

He is usually seen wearing a bow tie in most of the photos with guests visiting his properties.

“It’s all about speed and passion -- something a man can never resist,” he said.

— With assistance by Michael Wei, and Bonnie Cao

Before it's here, it's on the Bloomberg Terminal.