Developer is weathering volatile times

Xinyuan's US arm is selling apartments fast

Neither the gyrating stock market in China nor fears of a housing glut in Brooklyn have dampened the sales outlook for Beijing-based Xinyuan Real Estate and its US arm XIN Development Group.

"Stock market volatility tends to drive middle-class consumers to look more closely at real estate (in China). Our project is Brooklyn has sold fast and at a price we are satisfied with," George Liu, chief financial officer, told China Daily on Tuesday.

Xinyuan, a publicly traded company founded by chairman and CEO Yong Zhang in 1997, listed on the New York Stock Exchange in 2007, becoming the first Chinese real estate company to do so.

The residential development company focuses on large-scale, community-style projects targeting middle-income consumers in high-growth second- and third-tier cities in China. Xinyuan has built more than 21 million square feet of housing in Chinese cities such as Hefei, Jinan and Suzhou.

The company's Oosten project in Brooklyn in New York is the first building developed by a Chinese firm without a local partner in the US.

Liu said a penthouse apartment in Oosten recently sold for $6.5 million. Featuring distinctive Chinese elements, the 216 units average 2,000 square feet. There are seven different types of apartments: townhouses, duplexes, one-, two-, three- and five-bedrooms, lofts and penthouses. They were designed by Dutch architect Piet Boon.

Brooklyn has emerged as a favored destination by developers who have added thousands of housing units to a borough that was overshadowed by neighboring Manhattan until a few years ago. But fears of an oversaturated housing market have been expressed recently, particularly in an article in The Wall Street Journal.

The WSJ report said that Equity Residential, an apartment landlord based in Chicago, and Avalon Bay Communities Inc, noted some weakness in their Brooklyn portfolios. CityRealty, a real-estate listing service, said more than 2,600 new apartments will be ready in Brooklyn this year, up from 1,153 in 2012.

"There may be a supply problem in two years, but right now the market is still good," said Liu.

Liu said Xinyuan and XIN Development are not currently seeking other US cities for future projects. "We feel very comfortable in New York and prefer to focus on an area where we already have an office and staff to oversee development," he said.

As for further international development, Liu said Xinyuan is tentatively exploring a potential project in Malaysia.

Later this week, the US Federal Reserve will meet and might raise interest rates in the US for the first time in nine years. Although widely anticipated by many in the economic community, speculation on potential Fed action has temporarily rattled overseas credit and equity markets.

Regardless of what strategy the Fed adopts later this week, Liu doesn't anticipate a major fallout for the Oosten project.

"We have no worries over the Brooklyn project, as demand is strong. We could see some impact, but that probably won't happen for six to nine months," Liu said.

Noting that China's central bank, the People's Bank of China, took action in August to devalue the yuan and the sharp effect that had on markets globally at the time, Liu said central banks need to better anticipate how their decisions will affect markets.

paulwelitzkin@chinadailyusa.com

(China Daily USA 10/02/2015 page2)