China’s biggest builder just grew a bit larger in the US this week when Strategic Capital, a subsidiary of China State Construction Engineering Co (CSCEC) bought two residential sites in Jersey City.
Strategic Capital bought the two adjacent plots just across the Hudson River from New York City for an undisclosed amount with the hope of converting the combined 1.85 acres (7,500 square metre) location into 608,000 square feet (56,485 square metres) of new housing and 24,000 square feet (2,300 square metres) of retail.
The pair of site purchases are CSCEC’s second and third residential projects in New Jersey as the Chinese state-owned construction giant raises its international profile. News of the company’s latest North American project broke soon after a $3.5 billion Caribbean resort project being built by CSCEC filed for bankruptcy in Delaware.
37 Storeys of Condos Over the Hudson
Strategic Capital’s approach in New Jersey appears aimed at riding the upswing in the New York housing market.
The larger of the two plots that the Chinese investment firm purchased is already approved for construction of a 37-storey condo building, and the smaller site has approval for up to seven floors of new homes for sale. The property sale was announced by Holliday Fenoglio Fowler who brokered the deal on behalf of the seller.
This latest pair of acquisitions are located less than a mile and a half (2.25 kilometres) from 99 Hudson Street, a project acquired in 2013 by China Construction America, Strategic Capital’s direct parent and the primary US holding company of CSCEC. All three projects are situated close to the Hudson River Waterfront Walkway providing access to Hoboken, and are walking distance from the Newport PATH station providing train service to Midtown and the World Trade Center in Manhattan.
Strategic Capital was set up by China Construction America chairman and president Ning Yuan to invest in real estate opportunities. In addition to its real estate acquisitions in New Jersey, China Construction America also bought out New York’s Plaza Construction in 2014 and has been actively courting the business of Chinese developers putting up projects in New York and California.
The two top executives at New York’s Kuafu Properties, who now have three projects underway in the city also have strong ties to CSCEC, with CEO Shang Dai having formerly served as the construction company’s corporate counsel and chairman Shan Zengliang having co-founded a design company which now belongs to the state-run giant.
Hoping That New Jersey is Better Than the Bahamas
While China Construction of America seems to have been pleased enough with its initial New Jersey deal to go after more projects in Jersey City, not all of the Chinese builder’s projects in the western hemisphere seem to be going as smoothly. The construction firm and its development partner have been trading accusations over the failure of the $3.5 billion Baha Mar resort in the Bahamas, which filed for bankruptcy in the US in June.
On the same day that the Jersey City acquisitions were announced this week, China Construction America accused the project’s developer, Baha Mar Ltd of mismanaging the design of the unfinished project and failing to secure adequate financing, according to a report in Reuters.
Baha Mar’s developer had previously blamed project delays by China Construction America for causing the Caribbean resort project to run out of cash before completion.
China Construction America is also an investor in Baha Mar, having committed $150 million for a preferred equity stake in the resort project. Another $2.45 billion in capital was provided through a loan from China’s export finance bank.