Ty­coon lure

A flood of Chi­nese in­vest­ment is fu­elling an apart­ment boom and al­ter­ing Aus­tralia’s cityscapes

The Australian - The Deal - - Front Page - Story by: Greg Brown

The apart­ment boom is bring­ing a Chi­nese de­vel­oper to a CBD near you

ZHANG Yu­liang, the chair­man of one of China’s big­gest prop­erty de­vel­op­ment com­pa­nies, isn’t shy about his am­bi­tion to leave a ma­jor mark on the Aus­tralian sky­line. The busi­ness­man, who runs For­tune Global 500 company Green­land Hold­ing Group from Shang­hai, is ag­gres­sive in his de­ter­mi­na­tion to ex­pand the group’s lo­cal pres­ence. “Aus­tralia is very im­por­tant to us,” says Zhang. “Be­sides the four projects that we have al­ready here, which are worth over $1.4 bil­lion, we are now dis­cussing some other projects. We ex­pect our in­vest­ments to get big­ger.”

Zhang is one of a host of Chi­nese prop­erty ty­coons who has poured money into Aus­tralian prop­erty de­vel­op­ment in the past two years, of­ten pay­ing a pre­mium to out­bid lo­cal groups for sites. China’s rich­est woman, 33-year-old heiress Yang Huiyan, has led Coun­try Gar­den into Syd­ney’s North Ryde with a $500 mil­lion project, while Shao­qun Tan’s company, Fux­ing Huiyu Real Es­tate, is launch­ing $550m worth of apart­ments in Parramatta in the city’s west.

The most re­cent cashed-up en­trant is China’s rich­est man, Wang Jian­lin, who is es­ti­mated by Forbes mag­a­zine to be worth more than $US16 bil­lion. His Beijing based company Dalian Wanda Group an­nounced last month that it would cre­ate a $1.7bn Aus­tralian arm, to be seeded with a 55 per cent stake in the $1bn three-tower Jewel apart­ment and ho­tel com­plex on Queens­land’s Gold Coast. Wanda’s joint-ven­ture party in the project is another Chi­nese company, the Ri­dong Group from Zhuhai in Guang­dong prov­ince.

Zhang’s Green­land, which is owned by an arm of the Shang­hai city gov­ern­ment, has been on the tip of the tongues of most prop­erty play­ers since it ar­rived in the lo­cal mar­ket less than 18 months ago. In its first project, the group is turn­ing an age­ing Syd­ney CBD of­fice build­ing into the city’s tallest res­i­den­tial tower worth $600m. It is also pre­par­ing to launch the sales for two sub­ur­ban Syd­ney projects and aims to build up to 1500 apart­ments on a site it bought next to Mel­bourne’s Flemington race­course. The company has also teamed up with James Packer’s Crown Re­sorts to bid for the chance to de­velop

the multi-bil­lion-dol­lar Queens Wharf casino, ho­tel and apart­ment project in the Bris­bane CBD. The Queens­land gov­ern­ment will choose the win­ning party by the end of the year.

Born in Shang­hai in 1958, Zhang was the di­rec­tor of the res­i­den­tial depart­ment of the Shang­hai gov­ern­ment’s agri­cul­tural com­mit­tee be­fore set­ting up Green­land De­vel­op­ment in 1992 with funds from the city gov­ern­ment, which still owns 51 per cent of the company. He has been at the helm through the company’s 22-year rise. Last year it reaped a global rev­enue of about $55bn. Zhang is not afraid to weigh in on Aus­tralia’s de­bate about for­eign buy­ers lock­ing lo­cals out of the mar­ket. “Be­ing a wise coun­try (Aus­tralia) should be open to­wards the world. New York, Los An­ge­les and London are all fac­ing the same prob­lem (of high house prices) and they are all open to­wards (for­eign buy­ers). This is where the charm of the ci­ties are and is a nor­mal re­quire­ment for the mar­ket. China and Aus­tralia have a strong com­ple­men­tary eco­nomic sit­u­a­tion, which is why the Aus­tralian gov­ern­ment should be more open to­wards Chi­nese in­vestors.”

Peter Arkell, chair­man of the Aus­tralian Cham­ber of Com­merce in Shang­hai, says Chi­nese business lead­ers make de­ci­sions for long-term gain, more so than Aus­tralian lead­ers, which is why it may ap­pear that Chi­nese groups of­ten over­pay for Aus­tralian de­vel­op­ment sites. “It may ap­pear at times to be bullish but I think there is some­thing more con­sid­ered about this. If we are look­ing at an ac­qui­si­tion we might think, ‘Oh god, they paid over the odds for that’. But that’s in the con­text of to­day’s prices with­out a view or an un­der­stand­ing of the (com­pa­nies) long term (plans).” THE ar­rival of Wang Jian­lin’s Dalian Wanda Group this year rep­re­sents another big step for­ward for Chi­nese in­vestors here. The well-con­nected Wang is the vice-chair­man of the All-China Fed­er­a­tion of In­dus­try and Com­merce and has been a mem­ber of the Chi­nese Peo­ple’s Po­lit­i­cal Con­sul­ta­tive Con­fer­ence, a po­lit­i­cal ad­vi­sory body to the cen­tral gov­ern­ment, since 2008. He served as deputy to the 17th Na­tional Congress of the Com­mu­nist Party of China in 2007, un­der then-pres­i­dent Hu Jin­tao. Forbes says the Wanda Group owns 71 Wanda shop­ping plazas and 40 five-star ho­tels in China. Last year, Wang flew in Hol­ly­wood stars Ni­cole Kid­man, Cather­ine Zeta-Jones and John Tra­volta to launch an $8bn Ori­en­tal Movie Me­trop­o­lis in the Chi­nese coastal city of Qing­dao.

CBRE’s Richard But­ler, who has sold lo­cal prop­erty to Chi­nese buy­ers for more than 20 years, says there has been a big push for Chi­nese com­pa­nies to in­ter­na­tion­alise over the past three years. “They are ex­tremely for­ward think­ing in their de­sire to spread their eq­uity around the world. Th­ese groups are of­ten com­fort­able with Aus­tralia be­cause of ed­u­ca­tional ties.” But­ler says that Chi­nese prop­erty lead­ers take long-term re­la­tion­ships very se­ri­ously. “If you get their con­fi­dence they’ll deal with you time and time again. You don’t just say: ‘Here is a prop­erty, buy it.’ You say: ‘Here is a prop­erty and this is the profit you’ll make for th­ese rea­sons’, so that they buy again and again and again.’’

There are eco­nomic rea­sons for the re­cent global spread of Chi­nese prop­erty com­pa­nies. Groups such as Green­land and Wanda grew into multi-bil­lion-dol­lar em­pires on the back of China’s rapid ur­ban­i­sa­tion over the past two decades. The move­ment of about 300 mil­lion peo­ple from the re­gional ar­eas to the ci­ties sparked a boom in apart­ment de­vel­op­ment, and prop­erty and re­lated ser­vices grew to make up more than 16 per cent of gross do­mes­tic prod­uct, around dou­ble the rate of the Aus­tralian econ­omy. But the Chi­nese res­i­den­tial mar­ket is slow­ing, and com­pa­nies that are ea­ger for the same growth tra­jec­tory are look­ing abroad.

Ac­cord­ing to data re­leased by Cap­i­tal Eco­nomics, home sales in China dropped close to 18 per cent in the year to July while un­sold apart­ments in new de­vel­op­ments in­creased by 25 per cent. The Aus­tralian mar­ket, mean­while, has con­tin­ued to im­prove, with Syd­ney and Mel­bourne in the midst of an apart­ment boom, with prices in the year to June in­creas­ing by 15.6 per cent and 9.3 per cent re­spec­tively, ac­cord­ing to the Aus­tralian Bureau of Statis­tics.

SHAO­QUN Tan, the chair­man of Fux­ing Huiyu Real Es­tate, says the Chi­nese gov­ern­ment has ac­tively en­cour­aged big real es­tate com­pa­nies to ex­pand over­seas so that they can keep grow­ing with­out over­heat­ing the lo­cal mar­ket. Un­der the banner Star­ry­land, Tan’s group, which is based in the Chi­nese prov­ince of Hubei, west of Shang­hai, en­tered the Syd­ney mar­ket this year and is de­vel­op­ing the $550m Prom­e­nade Parramatta apart­ment project. The apart­ments range from $399,000 to $900,000, with real es­tate firm Sav­ills han­dling the sales cam­paign. Tan says Aus­tralia is the first coun­try in which his company has ex­panded.

“We were drawn to (Aus­tralia) by its strong res­i­den­tial real es­tate mar­ket, stun­ning nat­u­ral en­vi­ron­ment and good longterm eco­nomic growth prospects.”

Fux­ing Huiyu was es­tab­lished in 2001 as the prop­erty arm of man­u­fac­tur­ing company Hubei Fux­ing Sci­ence and Tech­nol­ogy. “I fore­saw the strong fu­ture of this in­dus­try with China ex­pe­ri­enc­ing a large de­mand for ur­ban­i­sa­tion as mil­lions of cit­i­zens were try­ing to in­crease their liv­ing stan­dards,” says Tan. “It is cer­tainly ev­i­dent 13 years later that my ca­reer strat­egy was cor­rect and my prop­erty pre­dic­tions were ac­cu­rate.” He says he is “mo­ti­vated by con­stant progress”. “I get the most sat­is­fac­tion im­ple­ment­ing out­side-the-box ideas that ul­ti­mately end up prov­ing their value. I like to be con­stantly chal­lenged.”

Aus­tralia’s most prom­i­nent apart­ment builder, Meri­ton founder Harry Triguboff says Chi­nese de­vel­op­ment groups have changed the build­ing land­scape over the past two years. He says there is more com­pe­ti­tion for sites and that the NSW gov­ern­ment has re­sponded by re­leas­ing more land for de­vel­op­ment. “On the one hand, we have the prob­lem of hav­ing more pur­chasers, on the other hand we have more sup­ply,” he says. “The fact that we have more (de­vel­op­ers) doesn’t worry me be­cause if (a site is stalled for de­vel­op­ment) I’ve got somebody to sell (the land) to.”

He says, “(Chi­nese de­vel­op­ers in Aus­tralia) are just be­gin­ning. The big de­vel­op­ers will take time to re­ally de­velop.” He thinks the in­crease in Chi­nese de­vel­op­ers will be a good thing for Aus­tralian ci­ties. “If we didn’t have them the ci­ties wouldn’t grow as fast as they are grow­ing,” he says. But he was tight lipped on shar­ing ad­vice on how to suc­ceed in the lo­cal mar­ket. “You’ve got to look what I’m do­ing and do the same,” he says. Ear­lier this year, The Aus­tralian re­vealed Triguboff, 81, was con­sid­er­ing sell­ing his $6.25bn company to Chi­nese gi­ant Coun­try Gar­den. Triguboff said in May: “I am of great value to them — I have all the land.” But it is not yet known whether a deal will pro­ceed.

Yang Huiyan’s Coun­try Gar­den is based in the Guang­dong prov­ince, across the bor­der from Hong Kong. Yang, who is worth $7.2bn, has a 70 per cent stake in the company founded by her fa­ther, Yang Guo­qiang, in 1992. Yang Guo­qiang, who built the company from scratch, grew up as a peas­ant and worked as a brick­layer and con­struc­tion worker in south­ern China. He passed con­trol of the company to Yang Huiyan, his US-ed­u­cated sec­ond daugh­ter, in 2005. Two years later it listed on the Hong Kong Stock Ex­change, mak­ing five of its share­hold­ers billionaires. Yang se­nior is still the chair­man of the company which is ranked 633 on the Forbes Global 2000 list. Just like Green­land, Wanda and Fux­ing Huiyu, Coun­try Gar­den is here for the long haul. It wants to be a ma­jor player and like other big Chi­nese prop­erty com­pa­nies, it has the cash to back it up. Coun­try Gar­den Aus­tralia man­ag­ing di­rec­tor John­son Zhang told The Aus­tralian the $500m Ryde Gar­dens project was a “mod­est” start and it would look at much big­ger projects. And what could be big­ger than buy­ing Triguboff’s Meri­ton?

Green­land’s Zhang Yu­liang. An artist’s im­pres­sion of the company’s $ 600m apart­ment project on the site of the old Wa­ter Board head­quar­ters in the Syd­ney CBD

Wang Jian­lin, left, whose Dalian Wang group plans to cre­ate a $1.7bn Aus­tralian arm to be seeded with a 55 per cent stake in the three-tower Jewel apart­ment and ho­tel com­plex on the Gold Coast, right

Coun­try Gar­den’s Yang Huiyan, left. Her company is en­ter­ing the lo­cal mar­ket with the $ 500m Ryde Gar­dens project, above

Fux­ing Huiyu Real Es­tate chair­man Shao­qun Tan,

right. His company is de­vel­op­ing the $ 550m Prom­e­nade Parramatta apart­ment com­plex in Syd­ney’s west, be­low

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