China Vanke Company, the largest property developer of China, has entered the U.S. market with a partnership deal to build a residential complex in San Francisco, California.
Credit Suisse said in a research note that Vanke will be partnering with American real estate firm, Tishman Speyer Properties, to build two high rise condos in the area. The venture marks Vanke's first entry into the real estate market of the U.S.
It has purchased 70 percent stake in the residential complex, which will comprise of two connected towers. One tower will have 37 stories and the second one 42. The complex will have around 655 residences on the whole. Prices of condos will range from $600,000 to $6 million, reports Reuters.
According to Credit Suisse, the new San Francisco project is primarily aimed at mainland Chinese buyers who are looking to purchase property abroad.
However, the investment amount was not disclosed. It probably is not a huge sum as Vanke made the deal's announcement via the company Chairman's micro blog instead of listing it on the stock exchange, reports CNBC.
"We are entering the U.S. market to continue this learning process, to understand business models in a mature market and accumulate management experience through project cooperation." Wang Shi, Chairman of Vanke wrote in his blog.
The deal comes on the heels of another contract that Vanke signed in partnership with New Development World to develop a residential site in Tsuen Wan, reports South China Morning Post.
Chinese real estate markets are booming. Recently, the Beijing government limited property purchase in the city. This has led the Chinese real estate investors to set their sights on projects abroad.
"Although China is an immense market which could accommodate further growth, it will inevitably become more competitive going forward. Expansion into overseas markets is a natural solution to this." Alan Jin, an analyst at Mizuho Securities Asia said to the South China Morning Post.
Experts have also asserted that venturing into the international market at this point of time will prove to be a first-rate opportunity for the Chinese real estate firms. The housing scenario in America is improving and investment in the market could reap in good profits.
