Xinyuan
Real Estate Company recently purchased a 216 unit condominium building in
Brooklyn, NY, at a cost of $54.2m, making its first ever development in
America. The firm plans to spend an additional $200m on this project. It is
anticipated that sales thereafter will be between $250 and $350 million.
Xinyuan Real Estate Company is also looking for other projects in America. The idea is to sell close to half of
the units it builds to Chinese investors. According to Omer Ozden, (a partner at
Beijing Capital, the private equity arm of the Beijing municipal government), Chinese
investors it seems, are more likely to purchase buildings from Chinese
developers in the US, than their American counterparts. Chinese investment in American real estate
has been growing steadily, with a focus on residential properties.
New York private equity is becoming increasingly popular for Chinese
investors. In recent years, the
government in China has been making attempts to deflate the local housing
bubble. In order to achieve this,
it has limited permission of property purchases. Thus the Chinese who want to invest in real estate are instead
turning to America. Indeed, as the
National Association of Realtors’ report noted, residential sales for the year
ended in March saw $9bn in American residential sales from the Chinese.
The city of New York is also gaining popularity for Chinese investors as
that is one of the places where they would like to live (along with LA, San
Francisco and Miami). Thus as
Ozden noted, these investors are purchasing properties that they will seek to
rent out or use as second homes or places for their children to stay while
studying abroad. In the past,
Chinese investors have had a harder time locating the right property in
America, as navigating US culture has not been so easy. Thus Xinyuan Real Estate Company is now
providing a great solution for Chinese looking to participate in New York
private equity deals.
