A Chinese home builder is poised to invest $1 billion into the U.S. housing market, starting with two developments in California and one in New York.
The venture, by Nanjing company Landsea Group, could signal the beginning of a wave of Chinese investments in single-family homes in the U.S., part of a larger influx of Chinese money.
Landsea — which builds about 12,000 houses a year in mainland China and also develops in Hong Kong and Germany — comes to the U.S. amid signs that the red-hot market at home is cooling off. Building costs in China have soared in recent years, and lately prices have started to fall in many cities.
“The Chinese housing market is slowing down. In the U.S., it’s coming up,” said John Ho, managing director of the company’s U.S. subsidiary, at a celebration Thursday at the Millennium Biltmore Hotel in downtown Los Angeles.
“We saw an opportunity to diversify.”
Landsea is starting with three projects: 187 units — mostly single-family homes — in Simi Valley; a town house development in Dublin, Calif., near San Francisco; and a condo building across the Hudson River from Manhattan in Weehawken, N.J. Its U.S. operations will be based in Pasadena, designing and developing homes but using local contractors and materials to build them.
The move represents one of the first entries by Chinese developers into the vast U.S. single-family home industry.
“This visit marks the advent of Landsea as an American home builder,” said Chairman Tian Ming, who spent 12 days touring the company’s three U.S. sites. “We have already established our presence in Asia and Europe, but there is no better housing market than the U.S.”
Chinese investors have been pouring money into U.S. real estate in recent years, seeking bargain opportunities and a haven for their cash. A recent report by Rhodium Group, which tracks Chinese foreign investment, found $600 million in Chinese spending on U.S. real estate in the second quarter of 2014.
Most of that spending has been on commercial real estate, including several high-profile projects in downtown Los Angeles, such as Greenland USA’s giant mixed-use Metropolis development next to L.A. Live.
Single-family subdivisions by Chinese companies have been rare. Along with Landsea, a subsidiary of Wuhan company Fuxing Huiyu Real Estate Co. has launched a few projects along the West Coast, including condos in Orange County.