$1 billion buy boosts real estate market

The recent purchase of one of the state’s largest homebuilders is boosting confidence in the Orange County real estate market and setting the stage for more consolidations.

On Friday, officials with builder John Laing Homes, announced the company had been acquired by Dubai-based real estate developer Emaar for $1 billion in cash, creating one of the world’s largest property developments in what is being called the largest residential real estate transaction in the history of the U.S.

Emaar, which is building what it described as the world’s tallest tower and world’s biggest shopping mall, purchased John Laing in an attempt to expand its global reach into the real estate market.

Despite cooling home prices in Newport Beach, real estate experts say the merger shows a global confidence in Orange County and the broader California housing market, which continues to be one of the highest priced real estate venues in the country.

“People from Dubai need avenues to invest and I think it’s a positive situation in that they have confidence in the market of California,” Tricia Moore of the Newport Beach Realtors Assn. said. “They must feel strongly about the local home market.”

While home prices are continuing to rise or remain steady in Orange County, recorded sales are beginning to decline and homes are spending a little longer on the market.

The stagnation might signal an initial cooling period that could entice big investors looking to swallow up smaller firms at a reduced rate. The lower profit levels could also make it difficult for local firms to compete with global conglomerates like Emaar.

Emaar’s purchase of Laing makes it the first Middle Eastern company to make a major investment in the California market and gives it an advantage over other global builders.

“Partnering with John Laing Homes is consistent with our strategy of expanding our business on a global basis,” Emaar Chairman Mohamed Ali Alabbar said in a statement. “This agreement will provide Emaar with an important gateway into the U.S. real estate market.”

By purchasing Laing, Emaar gets access to a company that constructs about 3,000 homes a year and controls 150,000 undeveloped lots in California. Laing is the second largest privately held home builder and the 20th largest builder in the U.S., bringing in an annual $1.6 billion in revenue. It’s also a respected brand name and was recognized as “America’s Best Builder” in 2006 by Builder Magazine.

Under the deal, John Laing Homes will continue to operate at its Newport Beach headquarters under CEO Larry Webb. The majority of John Laing’s senior executive team will stay in place, he said.

“All that’s going to happen is that we’re going to get a big cash infusion to be able to expand our business,” he said. “We hope to grow up to three to five times over the next five years.”

Webb said his company will expand its nine divisions in California and two units in Colorado and eventually look to move to markets in Arizona, Florida, Texas and Atlanta.

“We’ll look for opportunity and anywhere we think the population and jobs are growing, we’ll expand.”

The merger also prepares John Laing to assist on development projects overseas. Emaar has real estate interests in the United Arab Emirates, India, Egypt, Turkey, Morocco, Syria, Pakistan, Jordan, Lebanon, Bahrain, Tunisia and Saudi Arabia.