The well-known Waldorf Astoria Hotel in New York is struggling to complete the plan to turn hundreds of rooms into luxury residences. This is one of the most expensive, large and complex conversion project built.
China’s Anbang Insurance Group purchased the hotel on Park Avenue in 2015 for a record $ 1.95 billion. In 2017, the company closed the hotel, which has more than 1,400 rooms, to turn the luxurious hotel – with four years of work – into a smaller hotel, next to residential apartments.
Now, five years later, the project is still unfinished and work may continue until 2024, according to related sources. The cost of the change has swelled and is expected to reach $ 2 billion – 25% more than preliminary estimates. This will bring the total cost of acquisition and change to more than $ 4 billion.
The plague, the problems in the global supply chain and the rise in material prices slowed down large construction projects all over the city. But Waldorf has unique problems of his own, which have contributed to delays and cost jumps. Among these problems are complexities related to the demolition of rooms and the reconstruction of the hotel which is almost 100 years old, which is a landmark and therefore must comply with the conservation rules throughout the process.
The Chinese government actually took control of Anbang in 2018 after its chairman, Wu Xiaohui, was found guilty of a series of economic offenses such as fraud and abuse of power and sentenced to 18 years in prison.
A round of other senior officials in Anbang tried to reshape the project or change strategy while Wu was in jail. And the process stalled.
The latest victim of the cost swell was the CEO of Dajia Insurance Group’s US arm, which took control of Waldorf Astoria and the rest of Anbang’s assets.
U.S. CEO Andrew Miller left the company last week and has not yet appointed a replacement.
Ballroom at the Waldorf Astoria Hotel in 2015 / Photo: Shutterstock
Among the guests: each of the U.S. presidents since Hoover
The historical significance of the Waldorf and its rich past aroused much curiosity about the future of the hotel. The Art Deco building was one of the world’s luxury hotels when it opened in 1931. Until it was sold to the Chinese company in 2015, it has hosted every one of the presidents of the United States since Herbert Hoover.
The Waldorf was home to New Yorkers of the likes of General Douglas MacArthur, Frank Sinatra and Marilyn Monroe. The Duke of Windsor was hosted here after relinquishing the crown to marry the wife of American society Wallis Simpson. Hotelier Conrad Hilton, who acquired control of the property in 1949, once wrote about a photo of the hotel that he was “the greatest of them all.”
Recently, the hotel has struggled to preserve its legendary history. Some executives and latecomers say an upgrade should have happened a long time ago.
When the hotel reopens it will include 375 guest rooms and 375 apartments. Prices start at $ 1.8 million for a studio apartment and go up to tens of millions of dollars for a penthouse. Tenants will have a separate entrance, and separate facilities from those of the hotel, including a 25-meter pool overlooking Park Avenue.
“Not only corona but also war and rising interest rates”
Real estate agent Donna Olshan, of Olshan Realty, which publishes a weekly report on luxury deals in Manhattan, says Waldorf did not report deals to her.
“Now we have not only Corona, to which people have become accustomed, but also war, inflation, rising interest rates. And the whole of China is upside down,” Olshan says. “This whole cocktail is challenging for entrepreneurs.”
Douglas Aliman, the real estate agency that markets the apartments, announced in March that agents representing buyers will be able to receive their commission once the contract is signed. Usually agents receive the commission once the deal closes. This move is intended to provide an incentive for realtors.
Dan Tab, who oversees the sale of the apartments in Waldorf, declined to provide numbers, but said April was “probably the busiest month we’ve had”. “The 3% commission already with the contract increased the movement of brokers about six times compared to the monthly average, and doubled the number of sales meetings compared to March, which led to a lot of signed contracts,” he says.
Kedmi Anosika, a broker at Coldwell Banker Warburg, has an offer received from a foreign buyer, and he hopes the contract will be signed soon. “The location is great,” he says, “I think what a lot of people buy in Waldorf is nostalgia, and what the name stands for: luxury, and what New York represented in those days.”