China Vanke, the largest real estate developer in the world’s second largest economy announced today that it has broken ground on a new project in New York City with US-based partners Hines and RFR Holdings.
Vanke President Yu Liang took part in the ground-breaking, together with officials from RFR and Hines Chairman Gerald Hines for the new 61-storey luxury residential condominium on East 53rd Street, adjacent to the landmark Seagram Building.
The move by the Shenzhen-based property giant comes as part of a drive to diversify into new markets that last year saw Vanke launch overseas projects that include a $620 million joint project in San Francisco with Tishman Speyer, as well as deals in Hong Kong and Singapore.
According to a report in the Wall Street Journal,
Vanke will jointly develop 610 Lexington Avenue, a 61-story high-end condominium project located in Midtown Manhattan, it said in a statement. The developers are targeting New York and international buyers, it said. The developers plan to start sales in the fall of 2015 and hand over the units starting 2017, Vanke added.
Terms of the deal have not yet been disclosed. Speaking of the Norman Foster-designed project, Vanke’s Yu said, “The 610 Lexington Avenue project is our first in New York City, and our second in the United States. It truly reflects Vanke’s globalization objective of forging strategic partnerships with world-class developers and learning through close collaboration.”
Vanke was accompanied in the deal by China Cinda, the nation’s so-called “bad bank” which had a record debut on the Hong Kong Stock Exchange when it listed in December last year. According to a source familiar with the deal, Cinda’s role was to provide financing for the project to complement Vanke’s marketing muscle.
Vanke Diversifying to Stay Ahead
Earlier this year Vanke had faced criticism for its lack of diversification as analysts predicted hard times if the company did not adapt its business model.
In a statement, Vanke indicated that it will play a larger role in the management and operation of its New York project than it has in its Lumina development with Tishman Speyer in San Francisco.
Similar to its San Francisco deal with Tishman, in New York Vanke has chosen to partner with a US-developer, Hines, that has significant investments in China. Last year Hines bought a 17,937 square metre site in downtown Shanghai for developing a 156,000 square metre mixed-use project.
China Invades New York
Vanke is not the first Chinese real estate company to try to make it in the Big Apple. Last year, Shanghai-based Greenland Group acquired the US$4 billion Atlantic Yards project in Brooklyn, and real estate-focused investment group Fosun International Ltd purchased 1 Chase Manhattan Plaza from JP Morgan Chase for US$725 million.
In 2012, NYSE-listed Xinyuan Real Estate acquired a residential site in Brooklyn for $54.2 million.