The Greenland Sydney Centre needs a new builder to realise the vision
Shanghai’s Greenland Group has parted ways with the builder hired to construct the A$700 million ($501 million) Greenland Centre Sydney with work on the 235-metre tower scheduled to start this month.
The state-run Chinese developer and Brookfield Multiplex this week broke off an agreement for the Sydney-based engineering firm to build Greenland Centre Sydney, citing commercial differences, according to accounts in the Australian media.
Greenland has reportedly sold all but eight homes in the 478 unit building, but the project has already been delayed. The developer, which abandoned a Melbourne project earlier this year, is reportedly struggling to find a profitable way to develop the downtown Sydney site, which had been passed over previously by local developers.
Greenland Needs to Find a New Aussie Builder
The split between the Aussie builder and the Chinese developer was announced in a statement from Greenland, that was cited in the Australian Financial Review.
“Despite bona fide attempts to reach agreement, the parties have different views on certain commercial terms with respect to the ongoing contract to deliver the works and have agreed to part ways,” the Greenland statement said.
“Greenland Australia remains committed to delivering the project with early demolition work starting in May.”
Dalian Wanda also saw the deal to build its One Nine Elms project in London fall apart
Sources who spoke with the Financial Review indicated that the Australian side had found Greenland “difficult to deal with” and that Brookfield Multiplex was concerned about the feasibility of finishing the project on time after work had already fallen behind schedule. Failure to keep to the timetable would have made the builder potentially liable for contractual penalties.
Greenland had been successful in generating excitement among potential buyers of units in the project, after kicking off sales in December 2013 by selling off 250 of the possible homes in the first weekend – nearly all of the units on sale at the time.
The Shanghai developer’s struggle to manage the construction of Greenland Centre Sydney appears to mirror difficulties that Beijing-based Dalian Wanda Group has had with one of its early overseas projects in the UK.
The developer controlled by Chinese billionaire Wang Jianlin took on the mothballed One Nine Elms residential project in London during in 2013, but parted ways with its main contractor on the $1 billion project just last month, with the two sides also citing commercial differences. Wanda says it will re-tender the project.
Greenland Stumbles Down Under
Greenland chairman Zhang Yuliang has now had two projects run into trouble in Australia
Both Wanda and Greenland were among the early pioneers of overseas development by Chinese companies, and the two mainland giants have now each tripped over projects in foreign markets.
Wanda is reportedly trying to sell off a Spanish redevelopment project it bought in 2014 after the local government opposed Wang’s plans for tearing down and rebuilding the iconic structure.
Greenland Sydney Centre was the first major overseas project for Greenland, but is now its second stumble in the Australian market, after the developer withdrew from a 1,100 unit Melbourne project in the face of fierce local opposition this March.
The Australian media have reported that some local developers had run feasibility studies on the site of Greenland Sydney Centre, which sits next to a historically protected building in downtown Sydney, only to pass on the project as too challenging economically.
The Shanghai developer, which in the last few years has taken on projects in Melbourne, London, Los Angeles, New York and Malaysia among other destinations, is also restructuring its commitment to the $4 billion Pacific Park project in Brooklyn after its joint venture with New York developer Forest City Ratner announced in April that it was looking to sell a significant stake in the development.
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