At the lowest level of the US financial crisis, John Liang, Executive Vice President of Xinyuan Real Estate Co., Ltd. and his team began marching into the US’ real estate market in large scale. Currently the US real estate market has rebounded significantly, with the housing price in some regions even surpassing the level before the financial crisis of 2008. Over the past years, John Liang, Executive Vice President of Xinyuan Real Estate Co., Ltd. and his team have made remarkable achievements. With admiration in mind, Fortune World magazine conducted an exclusive interview with John Liang, Vice President of Xinyuan Real Estate Co., Ltd.
John Liang studied university in United States at the beginning of 1990s. After completing his study with major in architecture, he began working on the construction sites for many years, accumulating a wealth of experience. Looking back, John Liang said:” I found I was more interested in the development and overall operation of real estate projects. I wanted to become a talent in the field of real estate investment and development.” In order to obtain the first-hand understanding of the design and construction of the real estate industry, John Liang later studied MBA courses at The Wharton School of the University of Pennsylvania, and then served as high level executive positions in US real estate companies.
When talking about the development of Xinyuan Real Estate Co., Ltd., John Liang said “We entered the US market during the period from 2011 to 2012 mainly for two reasons. On the one hand, during that period, the capital in China’s real estate market wanted to go global; on the other hand, the real estate market in New York was at its lowest level and local market was in urgent demand for external capital because of a lack of capital.” John Liang has thorough understanding of why Chinese real estate enterprises wanted to go global. “After over 20 years of high-speed development, the profiteering era of China’s real estate market has come to an end due to a series of reasons from 2009 such as regulations by the Chinese government. Therefore, Chinese real estate enterprises need to look for opportunities overseas. “And US is no doubt the first choice for Chinese capital looking for opportunities overseas.”
On the topic of US real estate market, John Liang commented “Although US was the main cause for the global financial crisis of 2008, Today US has become the primary destination of capital flow around the world. The overseas capital mainly flows into the US stock market and real estate sector. In terms of real estate sector, California and New York are the two regions that attract most of the overseas capital. At the time of the financial crisis, the two regions were better able to withstand the shock, and they are the ones that recovered the fastest. New York is the economic center of the world, and the buyers of our real estate projects in New York come from all over the world. Currently, the real estate industry of New York is recovering at astonishing speed and has reached a rather high level. We had entered the market at the right time. Now, other real estate enterprises have also entered this market successively. However, it is no longer the best time those real estate enterprises because the asset valuations have exceeded pre-financial crisis levels.”
“We are different from other real estate enterprises in that we are the only Chinese real estate enterprise listed in New York Stock Exchange.” Said John said when asked about the development history of Xinyuan Real Estate Co.Ltd. in US. “As a result, we enjoy unique advantages. First, many of our shareholders are US financial institutions, including real estate funds. Our deep insight in the US local market gives us competitive advantage compared to other large Chinese Real Estate enterprises. We also have many independent directors, all of whom are the experts in the US real estate sector. Their deep network can connect us to quality projects. Secondly, we made heavy investment in establishing our operation team, including capital investment and financing, project management, engineering construction and legal. Other Chinese real estate enterprises mostly invest in the other’s and therefore could not play leading role in the projects. Overall, we have advantage in financing because we have the ability to operate our financing independently. Our strength in these aspects are what differentiates us from other large real estate enterprises.”
Over the past few years, John Liang and his team have developed a series of real estate projects, making remarkable achievements. “After we came to the US, we spent almost one year investigating about 100 projects. Now three of the projects have been put into construction, two of which are in the west coast of the US. One is in Los Angeles, the other in Nevada, which was formerly a bad real estate assets package. The two projects have almost been completed and both of them have made handsome profits.”
John Liang is now primarily focused on New York, where Xinyuan’s key Condo project development is located. Xinyuan developed a waterfront project located opposite to Manhattan, Brooklyn of New York across the river. John Liang is very proud of his company’s new project in New York: “We spared no efforts to build this project into a high-quality one. Designed by our famous architectural designer from the Netherlands, the project provides various house types ranging from one bedroom, and two bedrooms to pent house, among which the largest pent house exceeds 500 square meters. The building is equipped with a complete underground garage, an indoor swimming pool and big garden. And it just takes two minutes to walk from the building to the ferry that takes you to your office.”
John Liang is very optimistic about the prospect of this project. “Our success lies in the fact that we bought this plot of land at the time when the US real estate industry was at its lowest level. The overall development of this project is USD260 million, while the sales is expected to reach USD380 million at minimum. Since its construction in the first half of 2014 to the pre-sales in the second half of 2014, over 70 units had been sold within four months in the first batch of sales. Now we have begun the second round of sales. Since the housing prices in US have been rising recently, our project sells are very strong and we have already raised the sales price of our project three times. This project was condo type, and limited projects of this type had been constructed over the past few years. Therefore, currently the supply of condo projects falls short of demand. The whole project will be put into service at the mid of 2016.
Facing success, John Liang does not intend to stop. “We are now looking for the next project. Several projects are simultaneously under negotiation at the moment. We plan to begin developing the next project in the second half of this year.” Said John Liang. “We caught the right time.” John Liang commented sentimentally looking back at the company’s journey of success in the real estate industry over the past years. “In the past, we never thought that one day Chinese capital will come to United States to seek for investment opportunities. “At that time, many Chinese graduates preferred to working in companies listed in the S&P 500 index. At that time these company went to invest in China market. However, Chinese capital has become a strong force after experiencing the financial crisis. We are fortunate that we caught up with such an era.”
In the future both Chinese enterprises and Chinese capital will move towards internationalization. In the past, people only knew of Alibaba. Now, as more and more famous Chinese enterprises such as Wanda and Greenland begin entering the US market, the trend of Chinese real estate enterprises going global will be on the upswing in the future. Now, in the field of New York’s real estate sector, John Liang and his team has kept one step ahead, and has undoubtedly become the frontrunner.