China's biggest property developer China Vanke has made its entry into the US real estate market through a joint venture deal with Tishman Speyer Properties.
The Chinese company will take a 70 percent stake in the 669-unit San Francisco project, launched by Tishman Speyer which is located at 201 Folsom Street, media reports said citing a research note by Du Jinsong, a Credit Suisse analyst.
However, the size of the investment is not expected to be big as China Vanke did not make a stock exchange filing.
The housing project in San Francisco will target mainland Chinese buyers, who are familiar with China Vanke brand, according Credit Suisse, which cited Vanke management. The deal is still dependant on the approval by the Chinese authorities to move Vanke's capital overseas for the project.
"It is still too early to gauge the ultimate impact of Vanke's international expansion. Nevertheless, given the structural issues of the China property sector, we view this as a useful experiment by Vanke to find potential long-term growth drivers," the note said.
Chinese property firms are looking to expand overseas as Beijing limited the number of houses that can be built in major cities.
"There is no point telling Chinese companies to mind their own domestic business. A good enterprise in the 21st century must be armed with a global vision," Wang Shi, Vanke chairman, wrote on Weibo, a popular Chinese microblog site.
In 2012, another Chinese developer Xinyuan Real Estate paid $54m (£35m, €40m) for a plot in New York that has the permission to build 200 housing units. Further, China Development Bank provided a $1.7bn loan to US homebuilder Lennar Corp last year for two developments in San Francisco.
In January, China Vanke entered into a deal with New World Development to purchase a residential site in Hong Kong for $439m in its first project outside mainland China.