Wanda sell-off puts $5bn Gold Coast, Sydney projects in doubt
The commitment of Chinese conglomerate Dalian Wanda to its $2 billion projects in Sydney and Surfers Paradise is again in doubt, with the company offering to bundle up and sell its international apartment and hotel projects in a $6.6 billion mega-deal.
Wanda is undertaking Sydney’s super-luxury One Circular Quay apartment and hotel development and the three-tower Jewel project on the Gold Coast but the projects have been dogged by questions about the parent company’s ultimate intentions.
The company has assembled five of its iconic projects around the world, with the two Australian projects alongside London’s twin-tower $US1 billion One Nine Elms project, the $US1 billion development Vista Tower, pitched as Chicago’s third-tallest building, and a $US1.2 billion hotel and condominium project in Beverly Hills, California, to sell to a single buyer, according to the South China Morning Post.
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Wanda, owned by billionaire Wang Jianlin, has come under pressure as the Chinese government chokes investment in high-profile purchases of iconic luxury and entertainment projects as part of a broader anti-corruption drive.
The newspaper says investors have been approached by representatives of Wanda looking to sell all five projects in one line.
Wanda’s project includes a 60-storey residential tower and a 28-level five-star hotel overlooking Sydney Harbour.
“They are looking for one buyer who can snap up five development projects in five cities,” says one of the sources. “That will be a big investment. But basically they intend not to sell the assets at below cost, which is about $US5 billion.”
The report marks a significant change in Wanda’s affairs as most observers had expected a deal to be done quietly, with another billionaire stepped in to support Wang or take the projects off his hands.
A more public process could shake buyer confidence across its global projects and crimp its ambition of breaking price records for apartments in major global capitals.
Analysts contacted by The Australian say such a mega-deal is unlikely to succeed as separate buyers will be willing to pay higher prices for the individual projects.
Local sources have long speculated about the viability of the two projects.
Sales on the Gold Coast project have been sluggish while the Sydney project is considered a prize even when uncertainty about Wanda’s future is taken into account.
The Jewel development on the Gold Coast.
The two projects have already been offered as a pair, industry sources say. But they say this will not fly as interest is centred on the Sydney project.
Potential bidders are already positioning ahead of action in Sydney, with Wanda viewed as likely to form a joint venture with a reputable local operator that can complete the project and give buyers confidence, or strike an alliance with a deep-pocketed Chinese firm.
Wanda Commercial Properties and Wanda Hotel Development teamed to buy Sydney properties, including Gold Fields House, for about $487.7 million in 2015 and flagged plans to invest about $1 billion on the project.
The One Circular Quay development recently launched 60 of the 190 luxury apartments planned and a 181-suite five-star hotel is under way. Wanda is hoping to set new benchmarks in the city with two-bedroom units starting at about $5 million and three-bedroom units from $10 million.
It is also developing the beachfront Jewel towers at Surfers Paradise with Ridong Group. It is well into construction of the apartment and hotel complex ahead of expected completion in 2019. More than a third of the apartment space in the $1 billion towers have sold after a sluggish start. The towers will house 512 apartments and a hotel.
Dalian Wanda in August insisted that its two flagship Australian apartment projects were not for sale and would go ahead. But days later its Hong Kong-listed arm sold its stake in the two landmark apartment and hotel projects as part of a major shake-up of its global property holdings.
Wanda Hotel Development says it will sell its 60% equity interest in Wanda Australia Real Estate Co, the holding company of its projects in Sydney and the Gold Coast.
It will be purchased by Chinese company Dalian Wanda Commercial Properties, which is controlled by Wang and his family. The minority interest in the Sydney project is already owned by Wang’s Wanda HK entity.
This article originally appeared on www.theaustralian.com.au/property.
