Monday, May 12, 2008

FOREIGN INVESTMENT MUSCLE PULLING CHICAGO CONDO MARKET OUT OF SLUMP

Foreign investment and financing dollars from countries such as Ireland, Germany, China and Kuwait may be the muscle that pulls Chicago’s new-construction condominium market out of its slump, experts say.

“Several downtown condominium developments currently in the pre-construction marketing stage are finding a smaller pool of lenders interested in financing their projects,” said appraiser Gail Lissner, vice president of Appraisal Research Counselors Ltd.

“Equity requirements along with pre-sale requirements are reported increasing, as the mood in the lending community and its appetite for risk has undergone adjustments this year,” Lissner said.

However, several other Chicago condo projects are moving forward thanks to foreign backing or money from overseas, Lissner said.

Backed by Irish developers, Lexington Park Condominiums, a 35-story new-construction high-rise condominium and loft development on the northeast corner of Michigan Avenue and Cermak Road in the South Loop, appears to be on a sales and construction roll.

Sales at the 333-unit Lexington Park have surpassed the 50-percent mark and construction has soared past the 14th story, noted Sean O’Sullivan, chief operations officer and director of Ireland-based Chieftain Group, the developer. Prices range from $237,900 to $727,900.

Chieftain’s success in Chicago has led the Limerick, Ireland-based company to sign a contract for a second South Loop development site at Harrison and Wells streets.

See Y. Wong of Wabash Properties, developer of the 78-unit 1349 South Wabash Private Residences in the South Loop, recently obtained construction financing from a Chinese bank and broke ground last week for the 15-story high-rise.

The $30-million project is being financed by California-based Cathay Bank, a Chinese-owned institution which recently purchased Chicago-based New Asia Bank, Wong said. The development is 60-percent sold. Condo prices range from $223,500 to $479,500.

Wong also is developing the $25-million Canal Crossing, a 60-unit condominium development at 2318-2328 S. Canal in Chinatown. The development is 80-percent sold.

He recently launched pre-construction sales on the $80-million Grand Imperial Hotel, a hotel-condominium development in Chinatown. Both projects will be financed by the Cathay Bank.

Chinese money also is financing the Waterview Tower & Shangri-La Hotel, under construction along the Chicago River at Wacker Drive and Clark Street. The tower recently secured $300 million in construction financing funded by the Export Import Bank of China.

The 40-story Ritz-Carlton Residences, to be developed by Prism Development at 664 N. Michigan Avenue on the “Magnificent Mile,” recently secured $137.5 million construction financing from Germany’s Helaba Bank. In addition, Kuwait Finance House has pledged $40 million in a mezzanine loan.