Chinese developer Xinyuan Real Estate is taking on its first project in Manhattan after closing on a $57.5 million residential site earlier this month.
The NYSE-listed company signed preliminary agreements to acquire the land at 615 10th Avenue in Manhattan’s Midtown area in November of last year, with permission to develop up to 90 condominiums according to a statement from the company.
The Manhattan site will be Xinyuan’s second New York project, and comes amidst a burst of acquisition activity for Chinese companies globally which many analysts attribute to growing uncertainty regarding China’s currency and the country’s economic outlook.
Building Condos and Retail in Midtown
Xinyuan’s site, which is located between 44th Street and 45th Street in Midtown has 200 feet (61 metres) of frontage on 10th Avenue and includes both corners of the side streets. Currently approved plans allow for 105,000 square feet (9,700 square metres) of built area, including 20,000 square feet (1,858 square metres) of retail space.
The hunger among China’s well-to-do for New York real estate seems to be part of Xinyuan’s business plan. “Given the location of this project, we expect it will be appealing to both local and foreign buyers and this deal gives XIN the flexibility to consider additional projects in Manhattan and other locations,” commented Yong Zhang, chairman of the mainland-based company.
Xinyuan expects to begin construction on the project in the second half of 2016.
The Midtown project is the developer’s second deal in New York after Xinyuan helped blaze the Chinese trail into New York in 2012. The Ooosten in Brooklyn’s Williamsburg area was the first major project in New York by a Chinese developer when Xinyuan bought the site in October 2012 for $54.2 million. A penthouse in the project sold for a neighborhood record $6.5 million late last year.
Sliding Exchange Rates Help Drive Cross-Border Deal Records
This second New York deal for Xinyuan comes amidst a rush of cross-border investments by Chinese companies, with many analysts seeing the country’s sliding currency adding an extra level of urgency to the dealflow.
According to data from Bloomberg, Chinese acquisitions in the US soared to a record $10.75 billion in January, helped along by billionaire Wang Jianlin’s acquisition of Legendary Entertainment and Haier agreeing to buy GE’s appliance division for $5.4 billion.
Uncertainty has been growing regarding China’s economy over the past year, with top-level GDP growth officially slowing to 6.9 percent in 2015 – the lowest in 25 years. Perhaps more of concern to Chinese companies is the fluctuation in the value of Chinese yuan against the US dollar, with the mainland currency sliding as much as 2.37 percent against the greenback in the last 30 days.
On the real estate side, this has translated into Chinese developers and investors accelerating the pace of their overseas acquisitions.
In addition to the Xinyuan deal, over the last 30 days Poly Real Estate Group and China Overseas Land and Investment – two of the country’s largest developers – have invested in a total of three major projects in London and Australia worth over $465 million.
Also this month, the mainland’s largest foreign investor in real estate, the sovereign wealth fund China Investment Corporation was linked to a potential bid for a $2.4 billion real estate trust in Australia.