Shimao Property Chasing $914M Sydney Housing Project

Shimao Property, one of China’s largest real estate developers, is reportedly in the advanced stages of acquiring an office block in downtown Sydney, Australia for development of a new residential project valued at A$1 billion ($914 million).

The acquisition, which is said to currently be in the due diligence stage, would pave the way for the latest in a wave of residential constructions projects by Chinese companies in Australia, fueled in no small part by a growing appetite among Chinese wealthy for overseas homes.

Shanghai-based Shimao would be acquiring the site from Singapore’s sovereign wealth fund, GIC, which purchased the office building in 1996 for A$125 million ($114 million). An account in The Australian said that GIC stands to realise a profit of up to A$400 million ($365 million) on the transaction.

Hong Kong-listed Shimao, which is owned by billionaire Fujian native and Australian citizen Hui Wing Mau, grew into a multi-billion-dollar company through a series of large scale real estate projects in China. Among the company’s assets on the mainland are the Shimao International Plaza in Shanghai, a chain of 10 movie theatres, six hotels, and more than 37 housing projects.

Shimao Joins Rush of Chinese Companies Developing in Australia

If Shimao can close its Sydney deal, it will be on the latest in series of residential developments by Chinese companies undertaken in Australia in the last year.

Just last month a developer owned by China’s richest man, Wang Jianlin, announced plans to invest up to $1.57 billion into Australian projects, starting with a $1 billion hotel in Surfer’s Paradise. The investment by Wang’s Dalian Wanda would be the first for the company, after it acquired sites and assets in the US, UK, Spain and other countries.

In April this year, Country Garden, a Foshan-based developer controlled by China’s richest woman, Yang Huiyan, bought its own site in Sydney for $65 million.

Shanghai’s Greenland Group has been perhaps the most aggressive Chinese player in the Australian market, having spent more than $1.28 billion in the last 18 months to acquire three sites in Sydney, and another in Melbourne, for developing new housing. The state-run developer also is pursuing a downtown Brisbane casino project with a company belonging to James Packer.

The acquisition drive by Chinese companies in Australia is driven at least in part by demand for overseas housing among China’s upper classes. As China’s economy has slowed in the last two years, wealthy individuals have begun to look further afield for returns, and Australia has become a favorite target for both housing and immigration.

When Greenland Group began selling units in their first Sydney project late last year, nearly all of the available apartments were sold during the first weekend, with many of the buyers coming from Greater China. According to a study released by UBS earlier this year, Chinese buyers are expected to purchase US$39.54 billion worth of Australian residential property over the next seven years.