Guangzhou R&F, already one of China’s most prolific cross-border real estate investors has made a bold gamble in the Australian property market by paying a local developer triple the price that it had paid two years earlier for a site in Brisbane.
Brisbane-based Pointcorp had recently gained approval to build 980 apartments on the site, according to a story in the Australian Financial Review, despite concerns about contamination of the soil.
R&F, which has acquired more than 15 properties outside of China in the last two years, agreed to buy the land from PointCorp for A$82.5 million ($60.5 million), after the local firm had paid A$26 million for the riverfront land in 2013.
Buying at multiples of recently established values seems to have become a pattern for R&F, after the company last year helped Australia’s Metro Property Development to double its money in six months on another site in Brisbane, which the Chinese firm has now turned into a 600-unit condo project that was launched last month.
Former Owner Cites Contamination at Brisbane Site
Pointcorp had purchased the property on Brisbane’s Donkin Street from another local developer, DEXUS Property Group, in 2013 after the former owner shied away from building on the land over safety concerns.
“Donkin Street had substantial and unquantifiable contamination and DEXUS is not prepared to take on the risk of developing on contaminated sites,” the Financial Review cited a company spokeswoman as saying.
However, an executive with Pointcorp indicated that the soil pollution issues had been resolved.
R&F made headlines in Brisbane for the first time during August 2014 when it was revealed that the Chinese firm had helped Metro Property Development to turn a A$24 million profit in just over six months, for the former TAFE college site that it had bought in December 2013 for A$22 million.
The founder of Metro, David Devine, predicted at the time that Asian investors would flood the Australian property market with an oversupply of apartments.
R&F Planning $367 Million in Deals Down Under
The two Brisbane projects are part of a broader push by R&F to develop overseas, including what the company says will be A$500 million ($367 million) for acquiring new sites in Australia.
“While we have plans to expand into other capital cities, Brisbane is our current focus as a booming city with robust potential for population growth and development,” R&F deputy general manager Vincent Chen told The Australian last month. The executive added that, “We will continue to invest in development in Brisbane as it evolves towards New World City status.”
The Hong Kong-listed developer already has four projects in Brisbane and Melbourne, in addition to sites it has acquired in Malaysia and the US.
In the US, R&F has focused on California, paying $28.5 million in cash to acquire a site at 325 Fremont Street in San Francisco in March – less than a month after the Hong Kong-listed developer had paid $7.3 million for a smaller plot at 119 7th Street in the city.
Altogether, Guangzhou R&F has now acquired three properties in San Francisco, as well as a residential project in San Jose, California that it bought last year.
The US acquisitions are on top of six sites in Malaysia that R&F purchased in late 2013.