Miami-Dade County

The China vanguard: State-owned developer seeks to build big in Miami and Beach

A rendering shows China City Construction’s proposed North Beach condo as viewed from the beach side.
A rendering shows China City Construction’s proposed North Beach condo as viewed from the beach side. Arquitectonica

Welcome to Mao-ami.

OK, not quite, at least not yet. But in what may be just the latest sign of a world gone upside down, and is certainly a first for Miami, a company almost wholly owned by China’s Communist government has come to town to do big business — building luxury condo towers, no less.

China City Construction Co., a subsidiary of the Ministry of Housing and Urban-Rural Development of the People’s Republic of China, has spent more than $110 million to acquire a pair of prominent properties, one in Miami Beach’s North Beach neighborhood and the second in Miami’s West Brickell.

On the Beach site, a vacant beachfront lot abutting the legendary Deauville Hotel to the south, China City plans to build a 21-story tower with 42 condos. Because the lot is in a historic district, the plans will be considered by Miami Beach’s historic preservation board March 10.

On South Miami Avenue in Brickell, China City is partnering with another Chinese company, Hong Kong’s Chun Wo Development, on a twin-tower project, 80 stories tall, that would house condos and a hotel over two floors of retail and a parking garage. Those plans will be filed soon at the city of Miami, the venture’s attorneys say.

In a nice though perhaps incidental bit of reciprocity, both towers are being designed by Miami’s Arquitectonica, the global architecture firm run out of Coconut Grove that has offices in Hong Kong and Shanghai.

That China City is based in mainland China, where many companies are an outgrowth of government ministries, has been commonly known in Miami’s real-estate world since its purchase of the vacant Brickell site for nearly $75 million at the end of 2014.

Just how tight the firm’s relationship with the Chinese government is, however, wasn’t clear until China City recently submitted development plans to the city of Miami Beach, which requires disclosure of ownership. The one-sheet disclosure form, first published by the Next Miami website, links China City and various offshoots directly back to the housing ministry in Beijing.

Miami stood out as potential destination for them because it’s a beautiful city with great air quality and a focus on health care and wellness.

Gavin Loughlin, attorney for China City

The Chinese housing ministry, established in 2008, guides and regulates development and the construction industry across China. But it’s not exactly equivalent to the U.S. Department of Housing and Urban Development’s suddenly deciding to erect a housing project in, say, Moscow. Chinese state-owned enterprises have been increasingly fanning across the globe for years.

Some observers believe China City and Chun Wo may be at the vanguard of a wave of Chinese investment in Miami as Chinese enterprises increasingly look to grow beyond China’s borders, especially lately as the country’s once-sizzling economy cools.

Many are already deeply involved in Africa and Latin America, and it’s perhaps unsurprising that some — especially those involved in real-estate development — would look to booming Miami, which is also starting to attract tourists and condo buyers from China and the rest of Asia, to expand their portfolios.

A firm called American Da Tang Group, whose Chinese principals opened an office in Miami, acted as an intermediary in getting China City executives to consider the city.

“The Chinese have always been interested in New York, L.A. and Seattle, and to some extent Boston,” said Gavin Loughlin, an attorney at Miami’s Greenberg Traurig who represents China City. “Miami got on their radar because some of the principals happened to come down and take a look around.

“Miami stood out as potential destination for them because it’s a beautiful city with great air quality and a focus on health care and wellness. Land prices are lower than in New York. You have a lot of great attributes here that are opposite of what’s going on in China. And it’s a major city. The Chinese are looking at major cities where they can do major projects and make a dent.”

So far, the arrival of the Chinese companies in a city thickly populated by exiles from Cuba’s Communist regime has not rippled into the political sphere. But that could change as news of China City’s close government connection spreads, especially at a time when President Barack Obama’s impending visit to Havana has spurred debate locally about the propriety of doing business with Cuban state enterprises.

In the past, a hint of Communist connections has hurt some high-profile projects. In 1986, then-Miami Commissioner Joe Carollo helped sink a plan for a massive development on Watson Island backed by conservative icons Jeanne Kirkpatrick and Cuban American National Foundation chairman Jorge Mas Canosa by disclosing that one investor had business ties to Communist countries.

More recently, Miami political leaders, including Mayor Tomás Regalado, complained when developers of a long-delayed resort, also on Watson Island, announced their hotel would be managed by a Chinese company that turned out to have connections in Cuba. That deal ended with the recession.

On Monday, Regalado expressed reservations about the Brickell project, though not so much because of China City’s Chinese links but the unusual circumstance of having a foreign government directly involved in a major development.

It’s very strange that a government will venture into developing in Miami. We don’t know what their goals are.

Miami Mayor Tomás Regalado

“We have not seen a foreign government build in Miami as a developer before. That’s a concern,” Regalado said. “It’s very strange that a government will venture into developing in Miami. We don’t know what their goals are.”

Loughlin said the Chinese developers’ goals are simple: to do business and bolster their skills in construction and management by working in America.

Chun Wo, which is publicly traded and listed on the Hong Kong stock exchange, bought 45 percent of the Brickell property from China City — according to Next Miami, the property was valued at $88.88 million for the sale because the numeral 8 is considered a lucky number in China.

Both companies have a number of joint ventures in China and overseas, Loughlin, the China City attorney, said.

He said China City doesn’t necessarily intend to concentrate on Chinese buyers for its condos, though they will likely market in Asia.

“They will do whatever makes the most business sense,” Loughlin said. “They did tell me the Brickell project is very attractive for Chinese clients because they like water views without necessarily being on the water.”