China Vanke, a prominent real estate firm, is set to divest its interests in the China units of luxury hotel chain Banyan Tree Holdings for a sum of 480 million yuan ($67 million), according to reports from Bloomberg. This strategic move by Vanke is aimed at navigating challenges arising from the downturn in China's property market.

As part of the divestment, Vanke will relinquish its stakes in two hotel management joint ventures, namely Banyan Tree Services (China) and Banyan Tree Hotel Management (China). The valuation of these interests was estimated to be between 440 million yuan and 486 million yuan as of September 30, 2023.

Facing increased pressure due to debt obligations, Vanke, a leading developer in China, is grappling with issues such as sluggish sales, declining revenue, and total liabilities amounting to 1.28 trillion yuan. Although partly state-owned, Vanke has received more government support compared to its counterparts, as reported by the news agency.

Vanke has three notes maturing in the upcoming year, with deadlines in March, May, and June. Forecasts from investment banks and securities houses, including Goldman Sachs Group and Morgan Stanley, suggest that the slump in China's real estate sector is likely to persist into the next year. In response to these market conditions, Vanke's decision to divest its stake aligns with its efforts to adapt to evolving circumstances.

Simultaneously, Vanke has agreed to acquire Banyan Tree's shares in a hotel business named Banyan Tree Assets (China) Holdings for 30 million yuan. This strategic move reflects Vanke's ongoing efforts to streamline its portfolio and adapt to market dynamics.

In September, Banyan Tree Group and Ennismore, subsidiaries of the Accor Group, partnered with Dubai Holding to inaugurate the Banyan Tree Dubai resort at Dubai’s Bluewaters in November. The resort, featuring 179 rooms, including 30 suites, replaces the existing Caesars Palace Dubai, marking a significant development in Banyan Tree's global expansion efforts.