China’s fourth largest real estate developer by sales now has big plans for doing business in Australia, after China Poly proposed a A$154 million ($112 million) luxury development in Sydney.
The residential/commercial project would be built on a A$110 million ($82.7 million) site that Poly acquired in December, which is one of two Australian plots that the Chinese developer has snatched up in the last seven months.
Poly’s Sydney plans come as Chinese developers to continue to pour more capital into the Australian market, hoping for big returns from a combination of skyrocketing prices in the country’s biggest cities, rising demand for Aussie homes among Chinese consumers, and a depreciating Australian currency.
Poly Launching Projects in Sydney and Melbourne
Poly’s Sydney scheme calls for converting the former business park site in a northwestern Sydney suburb into a trio of residential towers yielding 501 apartments, according to an account in The Australian. The development will also include retail space.
The project in Sydney will pit Poly against some familiar competitors from the mainland, as Chinese developers such as Dalian Wanda, Country Garden Holdings and Greenland Group have all launched new buildings in the city over recent years.
And although state-owned Poly entered the market later than many other mainland home builders, it seems determined to make up for lost time.
In May the company bought a 51 percent stake in a project in the Melbourne suburb of South Yarra for A$19.8 million ($14.8 million). The Chinese developer is working with local Australian developer, The Southbank Group to turn the 2168 square metre site into 32,000 square metres of new apartments.
Guangzhou-based Poly is also said to have been in discussions regarding projects on Australia’s Gold Coast and in Queensland.
Betting on Rising Demand and a Falling Currency
Poly and its competitors are hoping to capitalise on an upswing in the Australian residential market, as well as rising demand among their traditional customers in China for buying homes down under.
In June Sydney’s median home price reached A$900,000, up 17.8 percent year on year, according to figures from CoreLogic RP Data. In Melbourne the median housing price reached A$615,000 last month, after growing 11.2 percent over the past year, according to the same survey.
And some of the most aggressive real estate investors have been from the mainland, with the Australian government saying that Chinese investors pumped A$12.4 billion ($9.76 billion) into Aussie real estate from April 2014 to the end of March.
The rush to buy Australian housing has in part been encouraged by changes in Chinese regulations making it easier to invest overseas, as well as by fluctuations in exchange rates that have seen the Australian dollar lose more than 25 percent of its value against the Chinese yuan over the last 12 months.
Credit Suisse last month estimated that Chinese buyers poured about $8.7 billion into Australian residential property in fiscal 2014, a 60 percent increase over 2013, and the bank expects mainlanders to invest another A$60 billion ($47.6 billion) into housing down under over the next six years.