The Folly of Embracing China as a Financial Angel

By:  William F. Jasper
10/23/2013
       
The Folly of Embracing China as a Financial Angel

U.S. governors, cities, counties, and companies look to China as a financial angel, but there are many devils in the details.

The views will be spectacular through the glass walls of the LUMINA towers, the new luxury residential development now rising in San Francisco’s pricey Rincon Hill bayfront neighborhood. The 655-unit high-rise project designed by award-winning architect Bernardo Fort-Brescia of Arquitectonica is a joint venture of New York-based Tishman Speyer, which builds, owns, and manages prestige properties worldwide, and China Vanke, the largest residential property developer in the People’s Republic of China.

China Vanke is taking a 70-percent stake in the $620 million project, its first venture into the American real estate market. Across the country on the East Coast, Chinese companies are also jumping in in a big way. China Daily reported June 27 on deals being completed in New York City, as the ground was being broken for LUMINA in the City by the Bay:

In early June, Zhang Xin, Soho China CEO, the biggest private property company in Beijing, joined a group of investors to pay $1 billion for 40 percent of stakes in GM Building in New York. Five months ago, Beijing Vantone Real Estate Co Ltd, another major developer in China, signed an agreement with 7 World Trade Center in downtown Manhattan to rent 200,000 square feet for a China Center.

China Vanke’s president, Yu Liang, told the Wall Street Journal his company is also looking at investing on the East Coast, most likely Boston, which has a large Chinese community. In September 2012, Beijing-based Xinyuan Real Estate Co. Ltd. purchased a parcel of land in the Williamsburg section of Brooklyn for $54.2 million. Xinyuan plans to build a luxury condo complex, with units for sale in the $4 million price range.

Grand China Fund has major multi-million-dollar residential projects going in Houston and Atlanta. Gaw Capital Partners is putting together $500 million for U.S. real estate purchases, reportedly with an eye to properties in Portland, Oregon, and Austin, Texas.

Greenland Holding Group is investing $1 billion in a mixed commercial-residential project in downtown Los Angeles.

In June, Wang Jianlin, chairman of China’s largest commercial real estate developer, the Beijing-based Wanda Group, announced plans to invest around $1 billion to build a five-star hotel and luxury apartment complex in New York. That followed closely on the heels of his announcement that Wanda Group was shelling out $1.56 billion to buy Sunseeker, Britain’s largest luxury yacht maker, and build a luxury hotel-apartment project in London.

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