Saturday, May 6, 2017

Chinese Modular Homes the Answer to Problem...Really?

There is only one question that needs answered here. Were ANY US modular home companies contacted about the housing problem in Delaware before the Chinese solution was brought to the table? I didn't think so!




An article in the Delaware Business Times of 5/5/17


 Working group hashes out plan for China-made modular homes


On Thursday, inside the Hotel du Pont in downtown Wilmington, Delaware, a group of economists, investors, and housing experts met to discuss a business venture that would leverage Chinese investment and manufacturing to produce modular housing units at low cost for Delaware customers.

The meeting was spearheaded by Dennis O’Brien, CEO of InfoVest, a Wilmington-based venture capital firm. The semi-retired investor and entrepreneur is also the former business editor of China Daily and a long-time champion for economic ties between the two countries.

“Delaware is in trouble,” O’Brien said. “China can be the answer to that trouble.”

The working plan is to partner with the Chinese manufacturer Maristar to produce modular homes for about $80,000 each, according to O’Brien. Maristar mainly builds shipping containers, but the company has adapted its facilities to produce modular homes with a similar steel, rectangular structure. The homes would be adapted to fit local building codes and shipped to the U.S.

How will the project help Delaware? The group spent much of the meeting working that out.

For the first half of the meeting, which spanned several hours, O’Brien pressed the idea of using the homes to build affordable communities in low-income parts of Wilmington, such as the area around Governor Printz Boulevard and the Brandywine River.

The group ultimately decided, however, that serving low-income buyers wasn’t feasible without collaborating heavily with the local government — a prospect that didn’t align with the goal of hitting the ground running.

“It would probably take a lot more groundwork, especially with the social programs, to get lined up,” said Christopher Counihan, a professor of international relations at the University of Delaware, who came up with the initial idea to partner with China on this type of project.

O’Brien said that making the deal too risky and complicated for the Chinese investors was also a concern.   

Instead, the venture will go after another demographic: foreign-born college students.

Dr. Jianguo Chen, director of the University of Delaware’s Confucius Institute, said the number of Chinese students attending the college has increased 200 percent per year. Chen, who attended the meeting, added that the University only plans to attract more of those students, and housing could become an issue.

“We thought the container modules could serve that Chinese population,” Counihan said.

The homes would be stacked into vertical apartments, upwards of 10 stories, with common areas and subdivided rooms for multiple students. Both American and Chinese students would be housed in the apartments, ideally encouraging integration among the groups.

InfoVest is seeking at least $100 million to get the project started. Much of that money could come from Chinese investment company Shanghai Yongquan Entrust Investment Development Center LP. Li Kai, chair for the firm, called into the meeting and expressed an interest in the project.

“Delaware is a perfect test case for how the Chinese can help as a country,” O’Brien said.

InfoVest is reaching out to American investors as well.

The goal is for the housing to be available to students in Septemeber 2018.

“This is something that could be implemented pretty rapidly,” Counihan said.

12 comments:

Builder Bob said...

We want to know the names of the economists and the housing experts. We want to know how modular homes can be built in China, put on boats, shipped halfway around the world and trucked to the building site can be cheaper than mods built in the US. We want to know if these mods will be given just a wink and a nod when it comes to meeting the building codes other modular factories must meet. We want to know who services the problems that will surely arise and we want to know why no American modular factory owner was sitting at that table. This whole thing sounds like somebody is going to make a lot of money in this deal and it won't be the "Made in America" modular home industry.

Anonymous said...

Builder Bob, you really need to read the article a second time. This is nothing more than a con artist trying to get people to invest in Cheinese made housing.

"The meeting was spearheaded by Dennis O’Brien, CEO of InfoVest, a Wilmington-based venture capital firm. The semi-retired investor and entrepreneur is also the former business editor of China Daily and a long-time champion for economic ties between the two countries.

The group ultimately decided, however, that serving low-income buyers wasn’t feasible.

Instead, the venture will go after another demographic: foreign-born college students."


Chinese students at the Univ of DE.

Anonymous said...

It seems to me that the Chinese, almost certainly through government assistance, subsidize these ventures. I cannot buy the parts to build cabinets as inexpensively as I can buy the "RTA" (ready to assemble) cabinets I purchase from a local Chinese importer! Transportation costs have to be a significant addition.

I'm a skeptic that the Chinese are competing on a "level" playing field.

Tom Hardiman said...

This is a HUGE area of concern that needs addressed. Yes its a private equity firm. Most likely, the company has backing from Chinese govt (almost all do). Here's the kicker, often times these Chinese companies bring the whole deal to the table including the financing package.

Recently a UK housing authority cut a deal with a Chinese manufacturer to open 6 Chinese factories in the UK, employing UK people to build 25,000 modular homes in the UK. The deal was worth $2.5 billion!

You can bet your last dollar that these Chinese companies have eyes and intentions on entering the US market. Despite all the world issues (or more likely because of them) US real estate is a solid place to park your money and international investors are doing just that.

Anonymous said...

Where is Beracah in all this?

Coach said...

I doubt they were contacted.

Speckbelly said...

Being from south Louisiana I would Never, Ever buy Chinese crawfish, even though it cost $3-4 more per pound. There are plenty of modular factories in the USA. Only an A-hole would entertain this deal, much less, let is happen.

Carl Nolan said...

There are so many good commercial modular companies in the US that looking outside to places like Poland and China makes absolutely no sense.

SPeterson said...

I want to be a part of the inspection process at every seaport that these "structures" are unloaded. None of them would leave the docks until they were compliant with the applicable State Codes. My gut tells me that the Chinese prices are being used to drive down the prices of USA manufacturers.

Anonymous said...

In all probability, these mods would conform to intermodal shipping container size, so shipping to a port-accessible city like Wilmington would be relatively cheap. My guess $80k price tag includes shipping and even factors in a healthy margin for the developer.

Anonymous said...

And we can assume that the interior walls will have Chinese drywall?......

https://en.wikipedia.org/wiki/Chinese_drywall

Coach said...
This comment has been removed by the author.