Builds Brooklyn condo project without local partner
Updated: 2015-05-30 04:16
By ZHENG XIN in New York(China Daily USA)
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Sales at 'The Osteen' spurs company to explore developing more buildings like it.
The Brooklyn waterfront is lined with new condominium projects and construction sites, but one new project stands out, "The Oosten".
Meaning "East" in Dutch, the property developed by XIN Development Group, the US arm of the Beijing-based homebuilder Xinyuan Real Estate, targets international buyers and wealthy Chinese.
The Chinese-developed mega-project rising on Kent Avenue between South 8th and South 9th streets is offering Chinese buyers a chance to get in on the action from afar, touting the property on Soufun.com, China's largest real estate website.
"Being heaven for New Yorkers, the gathering place of many talented artists and musicians, and the new Manhattan of New York City, the neighborhood, Williamsburg of Brooklyn offers the most potential in real estate in the city, and its housing price is estimated to quadruple in 10 years," said the advertisement for the project in Chinese.
"Close to Manhattan, the neighborhood has attracted many technological, culturally innovative companies, theaters and galleries in recent years, with an increasing population and rapid commercial development. Many wealthy people with annual household salary more than $300,000 choose to purchase in the neighborhood," it said.
"We made the decision based on its attractive price, trendy location with restaurants and nightlife, its convenience to Manhattan and its readiness for construction in a relatively short period of time," said Edward Cui, CEO of Xin Property Real Estate Consulting Co.
Xinyuan paid $54.2 million to New York investor Richard Kalikow in September 2012 for the two-acre parcel close to the East River and the Manhattan-connecting Williamsburg Bridge and has views of downtown Manhattan.
Featuring distinctive Chinese elements, including cooking ranges that vent outdoors for cooking with a wok, the 216 condo units average 2,000 square feet. The seven-story Oosten is expected to be 20 percent to 30 percent occupied by Chinese buyers when it is slated to open in 2016, with other non-native New Yorkers also purchasing, according to a construction overseer.
There are seven different types of apartments: townhouses, duplexes, one-, two- and three-bedrooms, lofts and duplex penthouses. They are designed by Dutch architect Piet Boon.
The townhouses will have their own entrances. Prices for the units, depending on size, will range from $450,000 to $4 million.
Promotional material at the site features artist's renderings of the project and photos of life in New York. The site also lists a toll-free phone number in China to reach sales staff in China to make a purchase at the Brooklyn development.
Although the project is not yet fully completed, some Chinese artists are looking into purchasing units, said John Zhaohui Liang, managing director of Xinyuan Real Estate Co Ltd, who did not provide names.
Halstead Property's Robert Lynn and Shelley Wasserman are marketing the units, a handful of which are already in contract, including a $710,000 one-bedroom and a $1.53 million two-bedroom, they said.
Wang Hairong told China Daily that he doesn't plan to live in the one-bedroom apartment he bought, but thought of renting it for $3,000 a month.
As the Chinese economy is slowing, many Chinese firms find investing their accumulated capital inside the country is no longer a good idea, and some large institutions are looking overseas in the real estate industry.
Based on the performance of Oosten sales so far, XIN Development Group plans to explore the developing more buildings like Oosten.
"Chinese money wants to be in America, whether for the welfare of the family or better education of the next generation," said Derek Dong, group account director of research agency Millward Brown, a global market-research firm based in New York.
"Chinese developers especially the residential developers are facing a serious slump in the business, as home prices fall and vacancies rise in the country's cities, and some of China's real estate titans are seeking out residential investments in overseas markets like New York," said Dong. "These might be just the very beginning of wealthy Chinese coming to cities like New York, and Oosten exemplifies a bigger trend that Chinese companies are eager to invest large reserves of cash in cities like New York, London, and Paris."
China's overseas property investments will become more frequent and diversified, and on the other side, for many Chinese individuals and companies, overseas real estate is viewed as a safe and reliable way to protect their wealth, he said.
Xinyuan Real Estate, a publicly-traded company founded by chairman and CEO Yong Zhang in 1997, listed on the New York Stock Exchange in December 2007. the first Chinese real estate company to do so.
The residential real-estate developer focuses on the development of large-scale, community style projects targeting middle-income consumers in high-growth second- and third-tier cities in China.
Under CEO Yong Zhang, Xinyuan has built more than 21 million square feet of housing in second-tier Chinese cities, including Hefei, Zhengzhou and Chengdu, according to its website.
The Oosten project is also the first building developed by a Chinese firm without a local partner in the US, which experts said is a bold move.
"Usually It's a wise choice to work with local partners as the biggest challenge for most Chinese developers is the lack of proficient knowledge on the local market," said Dong. "The Chinese developers have the ability to source building materials from the country and they know how to bring the rich Chinese buyers to the US development, but some still refer to US firms who familiar with local stuff."
"We are doing something different from other Chinese real-estate developers in the US. We are a sole developer and will handle the sales on our own, too," said John Liang, the project's local general manager.
"We looked at other sites in the US, but we'd like to start from New York, and this came as a good choice at the right time as we were looking," he said."We bought the property from a foreclosure, and that's why we got a good deal on the land."
The company is listed as being among the top six Chinese real estate titans snapping up NYC property by therealdeal.com, together with China Vanke, the largest residential developer in China; Greenland Holding Group, with urban complexes, industrial parks and business districts built in more than 80 Chinese cities; Fosun International, which made the biggest foreign investment in commercial office space with its $725 million purchase of 1 Chase Manhattan Plaza in 2013; Wanda Group; and the wife-and-husband team of Zhang Xin and Pan Shiyi.
zhengxin@chinadaily.com.cn
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