China’s Dahua Group has revealed plans for an A$1 billion ($761 billion) master-planned estate in Sydney’s southwest suburb of Bardia, the second project in this area of the city for the top 50 mainland developer which has created a second home for itself in Australia.
Development of the 88ha plot is expected to yield 1280 detached homes, according to a statement from Dahua, with the first 85 lots to be released on the market later this month, according to a recent report in Australia’s Financial Review.
The Shanghai-based developer is taking on the residential project just as the Sydney home market begins to taper off after a record run, and following a 0.2 percent slide in average home prices in the city during March.
Dahua Buys into State Government Initiative
Dahua’s latest development, named New Breeze, is one of a handful of projects launched by the Shanghai property group on Australian shores since 2014, and is its second in Sydney’s up-and-coming southwest. Construction on this latest crop of new homes, which will be priced between A$330,000 and A$670,000, is set to begin in July 2016 with a target completion date of mid-2017.
Like Menangle Park which, together with the Bardia land, it purchased from Urban Growth NSW for A$300 million in November last year, the master-planned estate will benefit from increased investment into the surrounding areas via the state government’s South West Growth Centre (SWGC) initiative.
New Breeze’s location, just 8km from the Liverpool CBD, is also within striking distance of a proposed second Sydney airport at Badgerys Creek. In addition to the 1280 new homes, the complex will include parks, cycle paths, playgrounds and sports grounds totalling more than 40ha of open space.
Chinese Investment in Aussie Homes Grows Despite Slowdown
Aggressive investment in Australian real estate puts Dahua Group in good company, with Chinese buyers accountable for A$24 billion of property investments down under during the 2014-15 financial year–more than three times the amount committed from the U.S.
The figure doubled the previous year’s effort in spite of regulatory measures put in place during 2015 to discourage foreign investment in Australian real estate — an outcome that Mingtiandi predicted.
This enthusiasm among foreign homebuyers for Aussie property has caused concern among lenders after prices fell in the Sydney market last month for the first time in four years. Just this week, Westpac Bank – Australia’s second largest – announced a freeze on new mortgages for non-local buyers.
A report released this month by HSBC predicted that housing price growth across Australia would rise by only single digits into 2017, after rising 46 percent in Sydney since 2012, and jumping 32 percent in Melbourne over the same period.
Despite these concerns about future growth, Dahua is part of a growing cohort of mainland property developers launching projects in Australia. China Poly Group has put forward a joint bid for a A$1 billion residential site at Sydney’s Wentworth Point, while China Overseas Holdings Ltd (COHL), one of China’s 10 largest developers, has recently finalized the purchase of an A$80 million development site at Macquarie Park in Sydney’s north.
Dahua Looks Beyond Australian City Centres
Following several inner-city purchases and an ultimately unsuccessful plan to redevelop the Sydney Fish Market, Dahua’s focus appears to be shifting outward towards high growth areas. In the case of both southwest Sydney purchases, Dahua was the beneficiary of a major state government land release — part of “A Plan for Growing Sydney” that involves investment in the city’s fringe suburbs.
Two of the group’s Melbourne development projects — Kingsleigh in the city’s far west and Loch Haven in the rapidly growing south east — also look to capitalize on a housing shortage in Australia’s capital cities that is seeing first-time home buyers priced out of central property markets and into developing outer suburbs.
New Breeze’s A$330,000 investment entry point puts it well within NSW’s First Home Owners Grant Cap of $A750,000. According to an article published by property portal domain.com.au, Sydney’s entry-level housing (priced at less than A$400,000) has shrunk to less than 4% of the market, down from 8.6% just 12 months ago.