Chinese developers surge into Melbourne again for apartment sites
In the final five months of 2016, mainland Chinese developers snapped up three-quarters of Melbourne development sites on the market through CBRE.
As they shrugged off concerns about apartment oversupply, tougher planning rules and higher property taxes, CBRE calculated that 75% of the 45 Melbourne development sites they transacted between August and December were sold to Chinese buyers.
Less than one in five sales were to Chinese groups in the first seven months of the year as Chinese government capital control measures and uncertainty about the federal election in Australia affected developer interest.
"We've sold more properties to Chinese buyers in the past five months than in any other five-month period since 2009," said CBRE national director Mark Wizel.
Property | Buyer | Price ($m) | Project | Permit |
7-23 Spencer St (CBD) | Nuway Wy | 97.0 | Over 1000 apartments | Yes |
Corner King and Little Lonsdale St (CBD) | Aurumstone | 43.8 | 430 apartments | Yes |
Norvel Estate, Ferntree Gully | Hong Se Int’l | 37.0 | Townhouse village | No |
615 Warrigal Rd, Ashwood | Hong Se Int’l | 36.0 | Mixed-use apartments | No |
85 Spring St (CBD) | Chinese developer | 85.0 | 230 apartments | Yes |
250 Sturt St, Southbank | Tiang Long | 11.0 | 16 storey hotel | Yes |
150-152 Bridge Rd, Richmond | Poly | 16.0 | Townhouses | No |
Three Point Cook sites | Dahua | 350.0 | 3000 houses | No |
Sayers Rd, Tarneit | New Sky | 60.0 | 800 houses | Yes |
The Australian Financial Review calculated that there has been more than $730 million worth of Melbourne development site sales to Chinese developers since August.
These included acquisitions by Dahua and Poly, and new entrants like Nuway Wy, which paid $97 million for the former Melbourne convention centre site with a permit for 1000 apartments.
Wizel said the convention centre site would have sold for $400 million were it in Sydney.
"Chinese developers see a lot of value in Melbourne and they are willing to accept a lower return because they can save money in other ways, such as by selling apartments directly into China and avoiding paying local estate agent commission fees.," he said.
"They also have a better read on demand from China for housing than we have. They wouldn't buy these sites it if they didn't have the end buyers."
Jiaheng Chan, managing director of Malaysian-backed developer Beulah International, said Melbourne appealed for all the reasons it was named the most liveable city in the world for six consecutive years.
He added a major drawcard for Melbourne is the education system and the quality of schools and universities.
Wizel said he expected a rise in activity in 2017 from some of the big Chinese developers including Greenland, Fosun, Vanke, Wanda and R&F, who were relatively inactive in 2016.
He noted that Chinese groups were also expanding their activities beyond development sites.