The size of recent investments from Chinese firms and individuals in New York real estate has commanded headlines. Generally speaking, the properties being bought are familiar to those in the New York City property business. Those doing the buying, however, are less well known.
In reality, the wave of Chinese investment in New York City property is being led by some of the biggest names in real estate in the People’s Republic. Some of these investors hope to fill American condos with wealthy Chinese home seekers and stock U.S. offices with China’s outwardly looking companies. For others, buying into U.S. assets represents a logical next step in expanding highly diversified portfolios.
At the same time, Chinese developers — particularly residential developers — are facing a serious slump in the business, as home prices fall and vacancies rise in the country’s cities. Indeed, a number of the nation’s big builders have flagged overbuilding and high land prices as causes for concern. That helps explain, in part, why some of China’s real estate titans are seeking out residential investments in overseas markets like New York.
Here, then, is a look at six major property players in China that are making waves in New York.
Given China Vanke’s position as the largest residential developer in China, one could say the company is starting small in the U.S. In February, a partnership comprised of Vanke, Aby Rosen’s RFR Holdings and Hines broke ground on 610 Lexington Avenue, a 61-story condo building designed by Norman Foster. Vanke will also develop a four-building, 656-unit condo development in San Francisco called Lumina in partnership with Tishman Speyer.
Vanke was founded in 1984, and began focusing on real estate in 1988. Since then, the company says it has built more than 500,000 homes in 70 cities. Vanke focuses on developing small residences for China’s growing urban population. Last year, it constructed 160 million square feet and brought in $28 billion in revenue.
Vanka recently voiced concern that prices are overheating in some Chinese cities, Reuters reported. Vanke president Yu Liang told a real estate forum the company could well plow 10 percent of its overall investment into overseas markets in the next five years. The company’s preferred destination in the Western world? The U.S., according to the news service.
Greenland Holding Group
It’s no wonder Forest City Ratner chose Greenland Holding Group when it sought a partner to help expedite the construction of the Atlantic Yards project (recently rechristened Pacific Park Brooklyn). Greenland is Shanghai’s largest state-owned enterprise. Since 1992, the company has built urban complexes, industrial parks and business districts in more than 80 Chinese cities. The company also specializes in developing ultra high-rise towers and has some of the world’s tallest skyscrapers in its pipeline.
Greenland is ranked number 268 in Fortune Magazine’s Global 500 last year — two spots above Goldman Sachs – and has $58 billion of assets under management as of 2013. In addition to real estate, Greenland has significant interests in energy, finance, construction and hotel and commercial center operations.
Fosun International’s $725 million purchase of 1 Chase Manhattan Plaza was the biggest foreign investment in commercial office space last year. That feat is no surprise when one considers the scale of Fosun’s business.
Formed in 1992, Fosun is China’s largest closely held conglomerate. Its cofounder and Chairman, Guo Guangchang, has been called the Warren Buffet of China, making Fosun the Berkshire Hathaway of the Middle Kingdom. The company has nearly $30 billion in assets under management and posted about $1.3 billion in profits last year.
Most of Fosun’s $8.3 billion in revenues in 2013 came from industrial operations, which include pharmaceuticals, property development, steel production and mining. It plans to aggressively develop its other main businesses — insurance, investment and asset management – over the coming decade.
Zhang Xin and Pan Shiyi
Last year, the wife-and-husband team of Zhang Xin and Pan Shiyi partnered with Brazilian banking magnate Moise Safra to take a 40 percent stake in the General Motors building for $700 million. The deal made Zhang and Pan stakeholders in one of the most valuable real estate assets in the US.
The duo is no stranger to big deals. Zhang and Pan serve as the chief executive and chairman, respectively, for SOHO China, the country’s largest developer of high-end office space. Founded in 1995, the company focuses on developing architecturally distinct buildings in Beijing and Shanghai by collaborating with notable architects such as of Zaha Hadid. Forbes puts Zhang and Pan’s fortune at $3.9 billion.
Last year, SOHO reported a profit of $1.3 billion on revenues of $2.4 billion. The company also transitioned to a business model focused on operating rather than selling buildings. SOHO has built about 32 million square feet of office space and has a total development portfolio of 58 million square feet.
Few details have emerged since Wanda Group chairman — and China’s richest man — Wang Jianlin said last year he would invest $1 billion in a New York hotel and residence. But Wang has shown his ability to execute. He purchased cinema chain AMC group for $2.6 billion in 2012. He also spent $900 million on a 90-percent stake in a Chicago mixed-use development earlier this year. Last week, he won the right to develop a former department store in Beverly Hills with a $1.2 billion bid.
Wang topped Forbes Magazine’s China Rich List with an estimated wealth of $14.1 billion last year. Wanda Group’s assets under management totaled $62.8 billion at the end of 2013.
Wang spent 16 years in the army and did a brief stint with the Dalian city government before establishing Wanda Group in 1988. Initially focusing on urban reconstruction in the seaport city of Dalian, the company embarked in 1992 on residential development in Guangzhou, China’s third largest city. Since then, Wanda has diversified into four major businesses: commercial real estate; hotel development and management; department stores; and cultural enterprises, including movie theaters, film production and theme parks.
In 2012, XIN Development purchased a Williamsburg condo site for $54 million. The firm has since begun construction on the Oosten, a 216-unit development designed by Dutch architect Piet Boons.
XIN Development is the U.S. arm of the Beijing-based homebuilder Xinyuan Real Estate. Founded by chairman and CEO Yong Zhang in 1997, the company has a simple strategy: it acquires land in China’s high-growth, second tier cities and develops middle-income housing. As of last year, Xinyuan had completed 28 projects comprising more than 42,000 apartments. Between 2009 and 2013, Xinyuan has grown revenues 50 percent to nearly $900 million, according to its last annual report.
Xinyuan became the first Chinese real estate company to list on the New York Stock Exchange in December 2007. Investors don’t appear to be entirely sold on the company, however. Xinyuan, which has a market cap of just $315 million, has seen its stock price tumble 73 percent since going public.