Ping An Insurance Group, one of China’s five largest insurers, has struck a second residential development joint venture with leading public-listed Australian real estate group, Mirvac, five months after their first joint venture agreement.
In the new deal, Ping An Real Estate, a subsidiary of the mainland financial giant, will co-develop Mirvac’s 500-apartment St Leonards Square project in Sydney’s north shore.
Mirvac acquired the 5000 sqm site at 472-486 Pacific Highway in the Sydney suburb in early 2015 for $121 million and has since launched stage one of the project in February this year.
Ping An and Mirvac Splitting Deals 50-50
Shortly after the announcement of the second joint venture on the Australian Securities Exchange, Mirvac and Ping An announced the second stage of the project was now open for sale.
“We are excited about our partnership with Mirvac expanding into another key residential market of Sydney…we remain confident in the long-term fundamentals of the Australian real estate market,” Ping An Real Estate chief executive Andrew Zhou said.
“Our proven capability to create quality residential product provides a solid platform to further leverage our relationship with Ping An over the long term, and to grow this part of the business in a capital efficient manner,” Mirvac’s managing director Susan Lloyd-Hurwitz said.
This second deal with Mirvac is the latest step in Ping An’s strategy to tap into the buoyant Australian residential market. It was widely known that Ping An had made several trips to Australia before it agreed to co-invest with Mirvac on a 50:50 basis just before Christmas last year.
Mirvac will provide development, construction and sales management services to the joint venture.
North Shore Project Follows Waterloo Deal
The inaugural deal for the pair was the 226-apartment project, “The Finery” in Waterloo, one of Sydney’s hottest inner-ring suburbs.
The city of Sydney has committed $13 billion to build a new urban township at nearby Green Square, which will capture Waterloo and other surrounding suburbs such as Rosebery and Alexandria.
75 percent of The Finery’s first-stage launch of 118 apartments and terraces have already sold, as reported by the Australian Financial Review.
While sales were solid, there were concerns about the volatility of the prices in that inner city area just south of the CBD due to a possible oversupply of apartments, the Australian Financial Review said.
At St Leonards Square, Mirvac has also pledged to limit the sale of apartments to foreign buyers, on the back of concerns with settlement risks.