Bloomberg News

Billionaire Huang Gets Second Chance in Iceland Land Purchase

March 02, 2012

Chinese billionaire Huang Nubo, whose attempt last year to buy Icelandic land for a golf resort was blocked by the government in Reykjavik, may get a second chance as local authorities explore a leasing deal.

Nine municipalities in northeast Iceland have expressed interest in getting Huang to help finance their purchase of the same land, which they then may lease back to Huang.

“I travelled to China in February to meet with Huang Nubo, in order to try to get this matter back on track,” Bergur Elias Agustsson, the mayor of Nordurthing, a municipality of 2,900 people, said in a phone interview. “Our idea is that we purchase the land and lease it back to him. This would allow him to build the resort and use that as a platform for further investments in the Nordic countries.”

The government in November rejected Huang’s Beijing Zhongkun Investment Group Co. plan to buy 300 square kilometers (116 square miles) of land, saying it would be “incompatible” with the law amid opposition to foreign ownership of property. Proponents argue the investment will help sustain a revival from the island’s 2008 financial collapse, as it renews a push into previous main areas of growth such tourism and fishing.

Huang had planned to invest about $200 million to build a resort with a hotel, golf course and racecourse, according to an Oct. 26 article in China Dialogue. In a September interview with Bloomberg, Huang said he was in talks to buy the land for $8.8 million from a group of farmers and was awaiting approval. Huang has a fortune of about $1 billion, according to Forbes magazine.

Poet Mountain Climber

Following the government’s decision Huang dropped his plans, state broadcaster RUV reported in November, citing his spokesman Halldor Johannsson. Huang in the September interview said he also planned to establish resorts in Denmark, Finland and Sweden within five years. The Iceland land purchase would have been the biggest by a foreigner, according to Huang, who describes himself as a poet and said he has climbed Mount Everest three times.

Huang said in September his connection with Iceland started 30 years ago when he was studying at Peking University. His roommate and good friend back then was from Iceland and later married a politician. Huang donated $1 million last year to set up an Icelandic-Chinese poet-exchange program.

“We’ve managed to persuade Nubo to continue exploring the possibility of investing in Iceland,” said Agustsson. “He’s very positive toward these ideas.”

Construction Start

The municipalities hope an agreement can be reached within four to six weeks, and then designs can begin later this year and construction within a year, the mayor said. The local governments are seeking financing through Nobu and “other means,” he said.

Since its financial meltdown, Iceland’s $12 billion economy has renewed a push on traditional sources of income such as fishing, energy and tourism. Iceland is now enjoying faster economic growth than the average in the euro area, the International Monetary Fund estimates. Gross domestic product will expand 1.1 percent this year, compared with a 0.5 percent contraction in the 17-member euro area, the IMF said Jan. 24.

“The question is not how can we turn down direct foreign investment of this magnitude, but rather how can one nation do anything else but comply with the laws it has passed for itself?” Internal Affairs Minister Ogmundur Jonasson said in a Nov. 26 interview, after he blocked Huang’s purchase. “It would have been easy to circumvent these laws, by establishing an Icelandic limited liability company. That reminds us of the necessity to reconsider these laws from top to bottom.”

The IMF said in a report today that a “moderate expansion” is forecast for Iceland and that domestic risks for the country’s economy include “uncertainty about the legal and business environment and about policies in key sectors.”

Imperative Agreement

Iceland ended a 33-month program with the IMF in August. The government was forced to seek external support in 2008 after its biggest banks defaulted on $85 billion in debt, triggering a currency sell-off and sending the economy into a recession. GDP sank 4 percent in 2010, before expanding by 2.9 percent last year, the Organization for Economic Cooperation and Development estimated in November.

“It’s imperative that this agreement can be reached in agreement with all affected parties,” said Agustsson. “Under no circumstances should the actions of the municipalities be considered as an attempt to circumvent Icelandic law.”

To contact the reporter on this story: Omar R. Valdimarsson in Reykjavik valdimarsson@bloomberg.net

To contact the editor responsible for this story: Jonas Bergman at jbergman@bloomberg.net


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