Xinyuan Buys Brooklyn Land, Plans $54.2M Condo
- Oct 22, 2012
Beijing’s Xinyuan Real Estate, acting through its U.S. division, XIN Development Group International Inc., has made its entrée into the U.S. multi-family market with the $54.2 million acquisition of a development site in Brooklyn, N.Y. The real estate company plans to erect a condominium community on the shovel-ready site.
New York investor Richard Kalikow was the seller of the two-acre parcel, which sits in Brooklyn’s desirable Williamsburg neighborhood. The property is ready to go, with $8 million having already been invested in the permitting and zoning process, as well as in construction of the foundation. Xinyuan will have quite a bit of space to play with, as the site can accommodate as much as 506,000 square feet of development.
The company is keen to get the project off the ground in order to capitalize on the increasingly loud call for condominium residences in New York. “The location is very popular with U.S. domestic purchasers, and New York is a top destination for purchasers from China,” Yong Zhang, chairman and CEO of Xinyuan, noted in a prepared statement. “The Williamsburg project will offer a quality residential condominium development to more than 200 New York families, as well as allow us to capture a large demand from China for quality residential product in the United States.”
Brooklyn’s condominium market is on the rebound and the numbers tell the story. Demand for new for-sale multi-family units is pushing up prices, which, in the third quarter, experienced a year-over-year increase of 7.2 percent, according to a report by brokerage firm Prudential Douglas Elliman Real Estate. Listing discounts dropped from 3.8 percent in the third quarter of 2011 to 1.8 percent in the third quarter of 2012.
Xinyuan plans to kick off construction of its Williamsburg project in the first half of 2013.
Xinyuan’s acquisition of the land for the condominium development is not just a major accomplishment for the company; the deal has greater implications. According to Xinyuan, the transaction marks the first time a Mainland Chinese developer has purchased land for a major residential project in the U.S. Given certain conditions in China’s real estate market, the company expects that more such transactions will soon follow.
“The government in China is limiting investment by individual purchasers in the residential real estate market through availability of mortgages, and this past year, outright restrictions in certain cities from residents owning multiple properties,” Omer Ozden, the advisor who led the acquisition team for Xinyuan, told Commercial Property Executive. “[The restrictions have been put in place] so as to keep purchases focused on actual dwellers as opposed to investment in order to slow price growth and make housing affordable for a wider section of society. These curbs have spurred domestic property companies to seek investment opportunities abroad.”