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Hong Kong investors buy hotels to profit from oil boom in US Midwest

Chinese investors, including some from Hong Kong, have bought property near drilling rigs in the northern United States to share in the country's oil boom.

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A power plant in North Dakota. Photo: Bloomberg

Chinese investors, including some from Hong Kong, have bought property near drilling rigs in the northern United States to share in the country's oil boom.

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Robert Gavin, chief executive of North Dakota Developments, said the investors were attracted to his company's hotel suites in North Dakota because projected gross rental yields were 46 per cent per year, which would be made possible by low purchase costs, expected high occupancy levels of more than 90 per cent, and "substantive nightly rates" of US$139.

The suites are rented out to visiting oil executives.

Thousands of oil workers are moving to North Dakota. Developers building accommodation for them include North Dakota Developments, which will complete construction of the first two phases of the Great American Lodge hotel for visiting oil company employees in the town of Williston next month.

North Dakota Developments is marketing 440 hotel suites for sale to investors in the first two phases at Great American Lodge, with 80 sold to mainland Chinese buyers and 15 to Hong Kong investors. Prices start from US$49,590 for a guest room with en-suite toilet and shower room.

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Recent advances made in hydraulic fracturing technology, also known as fracking, a process that releases oil and gas deposits in shale, has opened up an oil field in the Bakken region which straddles the US-Canadian border.

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