A Chinese company is helping to raise the San Francisco skyline.
Beijing-based Oceanwide Holdings Group Co has signed an agreement to purchase a downtown San Francisco site for $296 million from developer TMG Partners and capital partner Northwood Investors LLC.
Oceanwide announced it would build the second-tallest tower in the city on that site. The 910-foot (approximately 60 stories) office building will be designed by English architect Norman Foster. Oceanwide also will build a 605-foot neighboring tower.
TMG had purchased the property in a joint venture with Northwood from David Choo, the previous owner of the site, who had defaulted on a loan, for $122 million in June 2013. TMG did not respond to requests for comment.
Houston-based developer Hines has started construction on what will become the city's tallest building (1,070 feet), the Salesforce Tower, when it is completed in 2017. The distinctive Transamerica Pyramid, built in 1972, is currently San Francisco's tallest building at 853 feet.
San Francisco is a hot commercial real estate market. Cushman & Wakefield reported that rents in the city went up 5.1 percent year over year, compared with 3.9 percent in Manhattan.
Oceanwide has a hand in other developments in California. It has invested about $200 million to acquire the Fig Central Project, a retail, residential and hotel complex with three high-rise towers in the South Park neighborhood in downtown Los Angeles, through its subsidiary Tohigh Construction Investment. Construction started late last year.
Also, the company purchased a ranch in Sonoma County for $41 million that can accommodate a winery.
Lu Zhiqiang, president of the company, bought three large residential properties in Atherton, an affluent town near Silicon Valley, paying $21 million, $25 million and $30 million, respectively, The Wall Street Journal reported.
Chinese investment companies have been eager to explore the California real estate market, particularly in the San Francisco Bay Area, said Skip Whitney, head of China Services at Kidder Mathews, a San Jose-based real estate firm.
Even though Kidder Mathews is currently working with Oceanwide on another project, Whitney declined disclose more details at this point.
In 2014, Chinese investors invested $1.5 billion in California's real estate and hospitality sector, according to Rhodium Group, which tracks Chinese foreign direct investment.
In July, San Francisco's Alexandria Theater was sold to an anonymous Chinese company whose representative announced that the property would be used for a project that has already been approved by the San Francisco Planning Department.
In September, Chinese developer Full Power Properties purchased a downtown San Jose property that was approved for 643 residential units in two towers from KT Properties, a local real estate firm.
In December, XLD Group, the US subsidiary of Chinese property investment firm Sichuan Xinglida Group, has bought the 1,004-room Los Angeles Airport Marriott for $160 million.
"Chinese companies striving to go global and the real estate market slowing down in China are two main reasons for Chinese investors to acquire land or purchase both commercial and residential real estate in foreign markets," said Wei Bing, vice-president of the Bay Area Council, a policy advocacy organization that runs the California-China Office of Trade and Investment.
Even though the California market is hot, properties here are still relatively less expensive than in big cities in China.
Kenneth J. Petrilla, executive director of the California-China Office of Trade and Investment, said that California could become one of the key destinations for Chinese investment for a variety of reasons such as its historical ties with China and its strong economic development, good universities and research institutions, and beautiful landscape.