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Why would a Chinese tech company buy a $16 million Morgan Hill golf course?

An affiliate of a Chinese technology company has paid about $16 million for Coyote Creek Golf Club, a Jack Nicklaus-designed property located on the edge of south San Jose, the latest deal in a burgeoning wave of overseas investors targeting diverse Bay Area real estate assets.

The buyer is an entity associated with Beijing-based Sumavision Technologies Co. Ltd., which makers hardware and software for video delivery and broadcasting.

Sumavision SFO LLC acquired the property earlier this month, according to title records. The company is registered to Haitao Zheng, the founder and chairman of Sumavision, and is connected to a Los Altos Hills home that title records show Zheng purchased in October 2013 for $4 million.

A voicemail I left several days ago at the phone number of the address — which had an outgoing message that said it was the U.S. office of Sumavision — was not returned. Neither was a message left with the Beijing sales office of Sumavision.

The seller was Shatto Corp., which bought the golf club from Castle & Cook Properties (the real estate arm of Del Monte Co.) in October 2008.

Chinese investment in U.S. golf courses is becoming something of a trend, according to an L.A. Times story in April. For one thing, golf is increasingly popular in China, spurring development of luxe courses there, Bloomberg reported in April. At the same time, Chinese investors are seeking to park money in U.S. assets, and golf courses are trading at low prices thanks to a glut of building in recent decades.

And Chinese investment in more traditional real estate asset classes is also growing here. Recent transactions I've reported on include Guangzhou R&F Properties buying a 2-acre high-rise site in downtown San Jose and a Chinese investment firm in talks to buy office park Burlingame Point.

What's interesting is that Chinese buyers now appear to be moving beyond the more marquee, "gateway" cities such as New York, Los Angeles and San Francisco and doing deals in secondary markets. It's something Michael Cole — a China-focused real estate author and blogger I admire — noted on his blog last month, in reaction to my story on the R&F deal.

While I didn't make contact with Coyote Creek's new owner, Haitao Zheng was quoted in a China Daily story from April stating that he was looking for new investments in Silicon Valley.
"We have too much money in pocket, but where is the good investment choice?" he told China Daily, in this story about Chinese investors looking for deals in industries including real estate, energy, media, technology and agriculture.

Coyote Creek — which has a Morgan Hill address but is technically in the city of San Jose — is No. 9 on the Business Journal's annual golf course list, ranked by U.S. Golf Association men's course rating. It's the only "Nicklaus Signature" golf course in the Bay Area that is open to the public, according to its website. It features two 18-hole courses — the Tournament Course is designed for more seasoned golfers while the Valley Course is more suited for beginners.

Several messages left last week with the club's general manager weren't returned.

Posted On : 17 Sep, 2014