The site on Herring Street in Sydney is currently home to a set of low-rise apartments
One of China’s 10 largest developers became the latest mainland homebuilder to enter the Sydney market this week when China Overseas Holdings Ltd (COHL) bought a site in the city’s north side for A$80 million ($56 million).
The acquisition by the affiliate of Hong Kong-listed China Overseas Land and Investment (COLI), which ranked seventh among mainland developers by sales in 2014, is part of a flood of Chinese investment in Australia’s real estate sector, and comes despite signs that the country’s housing market may be slowing down.
Joining a Crowd of Chinese-Invested Projects in North Sydney
State-owned COHL bought the 5,022 square metre site at Macquarie Park in Sydney from Macquarie University, with permission to build up to 22,599 square metres of new space that could yield up to 280 apartments, according to an account in the Australian Financial Review.
The site in the Epping area of Sydney is just a few kilometres from where China Poly, another giant Chinese government developer in late 2014 bought a former office park from Australia’s Goodman Group, with plans to build a 501-apartment tower.
Also in the neighborhood is Shanghai-based Greenland Group, another state-run homebuilder, which just over one month ago outbid a field of nearly 20 competing investors to spend A$190 million ($133 million) for a 1.5 hectare site that is zoned to provide at least 800 apartments and a major shopping centre.
Guangzhou-based Country Garden Holdings also has a site in the area, with its Ryde Garden project expected to yield 800 new homes.
Developers Not Deterred by Slowing Market
COHL chairman Guan Qing is also the chairman of CSCEC, China’s largest construction firm
COHL’s acquisitions comes just over two weeks after the governor of Australia’s central bank welcomed a perceived slowdown in the housing markets in Sydney and Melbourne, following an 11.5 percent rise in Sydney home prices in 2015.
In an interview with the Financial Review, Glenn Stevens, who heads the Reserve Bank of Australia said that prices had pushed beyond the reach of most buyers, and that growth was now due to slow down. ANZ Bank, one of Australia’s largest financial banks, has predicted an average 1.4 to 3.2 percent growth in home prices across the country in 2014.
During the third quarter of last year Sydney prices actually declined by 2.3 percent, and nationwide home prices were down 1.4 percent in Australia over the last three months of the year.
Chinese developers have been among the most aggressive investors in the Australian market in recent years, with many of them hoping to sell homes to their existing client bases on the mainland, and to find a new territory for revenues as the Chinese market slows.
While this is the first Australian project for COHL, its parent company, China State Construction and Engineering Corp (CSCEC) is developing several projects in the United States and elsewhere in the America’s. CSCEC was also the primary backer of the now-bankrupt $3.5 billion Baha-Mar resort in the Bahamas.