Shanghai-based developer Greenland Group is apparently in talks to purchase a residential site in Melbourne, Australia which has the potential to yield as many as 2000 apartments for resale.
According to a report in the Australian, Greenland head Sherwood Luo returned to Shanghai after visiting Sydney recently, but is due to return to Australia again during September as Greenland looks to expand its holdings down under.
Adding US and Australian Assets to Greenland’s Portfolio
Greenland made headlines during July when it bought a site in Los Angeles to develop at US$1 billion project, and spent US$107.5 million during March this year to acquire a residential project in Sydney that it ultimately plans to spend US$498 million on. Greenland was advised on the Los Angeles acquisition by real estate consultancy CBRE.
In a report earlier this year by the Wall Street Journal, Greenland chairman Zhang Yuliang was said to be considering a residential project in Melbourne, and this current deal may be the implementation of that plan.
The Melbourne site is located near the city’s Flemington Racecourse and is currently owned by the Victoria Racing Club. According to the report in the Austrialian, two sources said the Chinese developer had been in due diligence for months regarding the acquisition.
However, although talks are currently ongoing, the group has previously looked at other sites in Australia only to return to China empty-handed. During 2012 Greenland is said to have discussed the purchase of a site in Melbourne’s Southbank for a 388 metre tall tower, but never consummated the transaction.
Government policy restrictions designed to control property prices in China, as well as neighboring markets such as Hong Kong and Singapore have led Chinese real estate developers to search farther afield for opportunities, and Australia has been one of the major investment targets this year.
Chinese Developers Selling to Chinese Buyers in Australia
By pursuing new projects in Australia, Chinese developers such as Greenland may be merely following their existing clientele.
A survey this year by the National Australia Bank found purchases by foreign buyers accounted for 13 percent of total demand in Australia’s property market during the second quarter, up from 5 to 6 percent in 2011. The figure was up to 20 percent in Queensland and 14.1 percent in Victoria, which according to the report “remain the choice locations for foreign investors.”
Among these foreign home buyers, Chinese buyers have been the key players, according to Australia’s Foreign Investment Review Board.
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