GSC, Tishman in real estate JV

GSC Partners and Tishman Speyer have launched a Chinese real estate joint venture, marking GSC’s first move into real estate.

New Jersey-based GSC Partners has announced a partnership with New York real estate giant Tishman Speyer to create a China-focused joint venture that will develop commercial, residential and mixed-use properties in Chinese cities.

Shanghai and Beijing are two of China’s fastest growing metropolitans, but other high-growth cities include Xiamen, Shenzen, Ningbo, Hangzou and Guangzhou. The pace of the country’s growth has led to speculation about a possible real estate bubble.

GSC and Tishman, however, are betting that the demographic shifts within China that have seen large pools of the population move from the country side to the cities will keep real estate demand robust. Moreover, with China’s economic development the expanding middle class could also help fuel the country’s real estate market.

GSC managing director Carl Crosetto told PEO that the joint venture will represent GSC’s first entrance into real estate. The firm launched a REIT in July, but this latest partnership will be the first time the group has invested in the development and management of properties. GSC currently operates funds that invest in distressed debt, corporate credit, European mezzanine and structured finance. Crosetto could not disclose how large a fund GSC and Tishman would look to raise, although he expects to finish fundraising sometime next year.

GSC co-founder and vice-chairman Keith Abell is going to co-chair the new fund, while Katherine Farley, a senior managing director at Tishman, will act as the opposite co-chair.

Abell has already gained significant experience in Asia. Before helping to found GSC in 1994, he had previously served as a managing director at The Blackstone Group, where at one time Abell spearheaded its Asian operations. During that period, Abell was based in both Hong Kong and Tokyo.

Farley, meanwhile, has worked on Tishman’s international expansion initiatives in the past. She previously led the group’s activities in Latin America and was the partner in charge of the Messeturm, the Frankfurt tower that stood as Europe’s tallest building for a number of years.

The joint venture is not the first foreign vehicle to target the growing Chinese real estate market. Groups active in the space include a number of the usual suspects, such as Citigroup, MacQuarie, Goldman Sachs, The Carlyle Group, Warburg Pincus, and others.

The rush of foreign capital has not gone unnoticed by the Chinese government. Most recently, the Shanghai branch of the State Administration of Foreign Exchange requested that city banks obtain approval on all transactions involving non-domestic buyers of real estate.