DOES it not seem that a silent annexation is underway?

-with investment in high-rise escalating from 2012

-venturing into medium-density until the NSW Government put a hold on the Code in 2018

moving into house and land packages and commercial property in 2018

IN NSW on the eve of the Medium-Density Housing Code in Sydney’s Ryde Electorate home banking Chinese developers appear to be actively investing in desirable locations like Eastwood and Denistone seeking large sites for redevelopment of townhouses, and triplex … suitable for overseas family settlement perhaps?

-made easy through the Family Visa, Guardian, Parent, Grandparent, Student, PhD Student Visa …


Chinese development in Australia in 2019: Knight Frank’s Michelle Ciesielski

Chinese development in Australia in 2019: Knight Frank's Michelle Ciesielski


Over the past five years, Chinese developers have significantly ramped up their presence building landmark residential towers around the world, including along the skyline of the Australian east coast.

In 2018, Chinese developers and investors purchased $1.3 billion worth of Australian residential sites; equivalent to 31% of total sites sold.

This was down substantially from the $2.02 billion recorded a year earlier, although the share of total sales fell only slightly from 33%; reflecting a wider, slower-paced market.

There is no denying Chinese developers have met with challenges throughout this time. From the Chinese government attempting to moderate capital outflow, to locally, the impact when major domestic banks restricted lending to offshore borrowers.

This limited Chinese developers’ ability to rely on deep databases of clients familiar with projects in their home towns.

In addition, current challenges being faced by all developers include the local changes to Foreign Investment Review Board (FIRB) rules and the Australian Prudential Regulation Authority (APRA) encouraging stricter lending practices for investors cooling off-the-plan presales—not to mention the introduction of state-based surcharges.

The majority of Chinese developers which have entered the Australian landscape are settling in for the long haul, now diversifying their portfolios to adapt to local market trends.

Over the past year, the likes of Zone Q, China Poly Group, Yuhu Group and Aqualand have increased their exposure to office assets and this trend is likely to continue in 2019.

32 Kitchener Parade, Bankstown, NSW 2200, Image 0

Photo: Spring Square by Poly: Bankstown


Photo: Zone Q Investments Debut In Sydney With New Luxury Project; Alfred Street Milsons Point.

Aqualuna is a new boutique eight-storey, 63-apartment building designed by Koichi Takada architects.

Also they are shifting weight towards lower-density residential with 41% of sites purchased in 2018, up from 29% in 2017. Overall however with a 58% share, the more accustomed, higherdensity sites still dominated; this past year moving away from medium-density sites.

An aerial view of Menangle Park, to be developed by Dahua Group Australia.

Photo: Daily Telegraph: An aerial view of Menangle Park, to be developed by Dahua Group Australia.

Country Garden Australia releases vision for Windermere masterplanned community

Photo: Property Observer: Country Garden Australia unveiled the vision for their Windermere masterplanned community, representing their foray into house and land development.

Chinese developers and investors have purchased more than 25% of the residential development sites that have transacted each year over the past five years.

Factoring inlead times for planning and marketing the project, naturally the number of Australian apartments built by Chinese developers only started to ramp up in 2016, and were located in Sydney, as shown in Figure 1.

In saying this, reflecting on the past five years, Chinese-developed projects have tended to move hastily into construction mode once development approval is granted; in many cases citing a lower reliance on funding (when compared to a local developer).

*Almost 11% of all new apartments, or 5,160 apartments, were built by Chinese Collective Sales for Development September 2018 Australian Residential Development Review 2018 developers in Sydney, Melbourne and Brisbane in 2018.

Still concentrated on the major east coast cities, this share is projected to rise to 15% in 2019 for those 5,440 apartments currently under construction, then increase to 22% in 2021.

This includes those projects which have already commenced, and those with development approval which are currently being marketed (7,360 apartments).

With current headwinds heading into 2019, the likelihood of all projects proposed by Chinese developers going ahead in this timeframe is diminishing, except those with an exceptional product.

Projects submitted for development approval and those already with approval, but not yet having started a marketing campaign, tend to taper-off substantially with less than 6% of total projects in the pipeline each year beyond 2023.

Going forward, developers—both Chinese and local—must hold realistic expectations following a residential market in correction mode after a lengthy period of significant growth.

It will be imperative proper time is allocated to strengthen their position in the market for when the time to proceed arrives.

MICHELLE CIESIELSKI is a Director within Research & Consulting at Knight Frank

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