Local developers fight for position as Chinese exit picks up pace

A sale of the Jewel Towers in Surfers Paradise, above, was considered, drawing interest from global funds and developers. Picture: Luke Marsden

Australian developers are jockeying for position on major assets being unloaded by big Chinese developers as the offshore giants wind back some of their more ambitious schemes in major capitals.

The Chinese groups swept into the market with a wave of projects in the middle of the last decade with a plethora of deals spanning luxury apartments and hotels with many successfully selling units to offshore buyers in the last boom.

But now many are winding back their ambitions in the local market, partly due to the China’s own property crunch but because local conditions have proven tougher than expected, with some looking to sell off unwanted stock and land parcels that they no longer want to develop.

In one of the biggest plays, China’s state-backed Greenland has quietly offered several stages of its massive mixed-use residential development Park Sydney, in Erskineville, in Sydney’s inner-west.

The development is being undertaken via Greenland Golden Horse, a joint venture between Greenland Australia and GH Australia, and the pair launched the second stage of the massive precinct last month.

They have already completed 330 apartments in the first stage buildings, Botany and Cascade. In the second stage they are developing the eight-storey Arbor, whose name references the jacaranda trees lining the building’s perimeter on Ashmore Street. But the remaining three stages of the Park Sydney project, which all up spans about 6.9 hectares and will have about 1400 apartments, are believed to be on the block.

Local residential heavyweight Stockland is believed to be leading the field for the parcel which could trade for about $320m but this could not be confirmed. The listed developer and the agent linked to the deal, Colliers, declined to comment on any negotiations.

Greenland also would not comment on selling off future stages of Park Sydney but said the first completed stage had “received positive feedback from purchasers on the quality of construction and the retail offering”.

The second stage is slated for completion in 2024.

An artist’s impression of the second stage of the Park Sydney estate in Erskineville, in Sydney’s inner west, being undertaken by Greenland Golden Horse.

“The following future stages of Park Sydney will be developed as planned, in order to deliver a vibrant retail and residential precinct for the local community,” Greenland said.

If a deal came to fruition it would mark a major return to the apartment sector by Stockland which has flagged its intentions to get back into the area under new chief Tarun Gupta.

Stockland also has a site in the western Sydney hub of Parramatta and another in inner-city Rosebery but wants to increase its production of build-to-sell apartments and also is exploring build-to-rent units.

Greenland had also weighed selling about 200 unsold apartments in its “nbh at Lachlan’s Line” development in northwest Sydney. There are six apartment buildings at nbh, all of which are now complete. But sources said this process was not ongoing.

The company has also been trying to offload a land parcel that is part of that site. It can sustain about 300 units or a hotel and serviced apartments but agents JLL declined to comment on the process.

Greenland been selling and in February offloaded its luxurious Primus Hotel in the Sydney CBD to Pro-Invest Group for $132m. But it does not appear to be in distress and generated an operating profit of $68.39m in 2020.

The moves come as other Chinese developers trim their exposures. Poly Group has long been keen to sell its flagship office towers, the Poly Centre in Sydney and 1000 LaTrobe Street in Melbourne, which will house Myer.

It is now offering a major Richmond development site, where it had planned a residential project before switching to office in 2019. CBRE and Knight Frank are asking more than $35m.

The most high-profile of the developers – Yuhu – has been in retreat for some time.

In 2019, Yuhu head, now exiled billionaire Chinese developer and political party donor Huang Xiangmo sold a half share in the Jewel development as well as Sydney’s One Circular Quay project for $575m to a China-linked entity known as AW Holding Group.

The Australian has learned that the low-profile owners of the Gold Coast property recently ran a brief process in which a sale of the Jewel Towers was considered, drawing interest from global funds and developers.

Industry players last month were working up plans to acquire either a stake in the near complete project or to undertake a full take out but they were thwarted when the owners – one of whom has been a large shareholder in the Evergrande group – decided to retain the project.

But the owners decided not to proceed, instead pursuing what those close to the deal termed an “asset shuffle”.

One property executive said he had presented two offers – including a proposal backed by a sovereign fund – to take out both the Jewel and Sydney sites. But they had not been accepted by the owners.

“He doesn’t seem to be interested in selling,” one player said.

The residential element of the three-tower Gold Coast development is finished and hotel brand Langham is completing new designs for its rooms, which are slated to open next year. Industry players said the investors behind the project were now being urged to put the individual apartments up for sale.

Hotelier Langham is working on remodelling the planned five-star The Langham, Gold Coast, and about 70 luxury units in the first tower are being occupied.

Yuhu has been selling other properties and in May it sold Eastwood Shopping Centre in Sydney’s suburbs to an Asian holding company, called Eastwood Centre.

But much of the action could be in the Sydney CBD as some big sites are being shaken loose, although their owners are not under pressure to sell.

Private Chinese developer Han’s Holdings, which has proposed a dramatic 80-storey twin-tower scheme in the mid-town precinct, is weighing an exit from the project that will have an end value of about $3bn.

Local and international developers are looking at the site, known as 338 Pitt St, and Han’s Holdings is taking advice from JLL on the property which amounts to a slice of an entire city block.

Others are staying in for the long haul. Chinese developer Australia YMCI says it is committed to the site which the company bought from Goodman Group for more than $600m during the last property boom.

It is now behind a 4500 apartment mini-city in Sydney’s west that was reported to be under financial pressure, but the company has insisted that its Ovation Quarter projects will go ahead.

AYMCI has sold about half the apartments in its first stage and says its pressing ahead with plans for the $5bn project. The development spans over 18ha and includes 14-storey apartment towers, retail areas and a future school.

AYMCI head of development Andrew Hall says the company is progressively developing the site and has spent a “considerable time” refining its masterplan and it has approval for another 411 units.

“The market has definitely picked up for us we’ve got a very good product. We’ve met the market pricewise and with the type of product that we’re offering to our customers,” he said.

For now, Chinese developers have many more years on the local scene, even as some are ready to take their leave.