22-10-2015, 08:16 PM
Developers in Australia roll out red carpet for wealthy Chinese
[Image: 938791-0341d3f6-7792-11e5-b642-5d72264fdbf2.jpg]
Model Megan Gale with Liana and Iwan Sunito of Crown Group at the Infinity launch, Sydney. Source: Supplied
[b]It used to be Hollywood that staged red-carpet premieres to promote blockbuster movies. Now, real-estate developers in Australia are using the same tactics to sell glitzy apartments to Asia’s rich.[/b]
Crown Group Holdings recently treated about 1500 guests to an exclusive preview of its yet-to-be-built Sydney residences — a shimmering 20-storey complex dubbed “Infinity” worth about $575 million. Fashion label Armani sponsored the event, Swarovski displayed jewellery and Jack Daniel’s served a limited-edition whiskey.
The extravaganza, repeated in Singapore and Jakarta, helped Crown sell all but two of the development’s 326 apartments in a single day in September.
Among those drawn in by such spectacles are wealthy Chinese, who are helping fuel a residential construction boom that has been shielding the Australian economy from recession as the nation’s long mining boom ends. Cranes dominate skylines above Sydney and Melbourne, which are popular with Asian migrants. Current rules generally only allow foreign investors to buy real estate before construction, typically in apartment developments.
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Cracks are emerging in the market, however. On Friday, the Reserve Bank warned that risks to residential property developers had risen over the past six months, with inner-city Melbourne and Brisbane particularly exposed to a supply glut of apartments.
The central bank has previously warned that any sudden collapse in home prices risks destabilising the nation’s banks and the economy, which grew by just 0.2 per cent in the second quarter from the first, the slowest pace in four years.
“People underestimate how much residential construction has been propping up the economy,” said Warren Hogan, chief economist at ANZ.
[Image: 938820-0904b056-7792-11e5-b642-5d72264fdbf2.jpg]
Infinity at Green Square.
Approvals to build new dwellings hit an all-time high in the year through August, as did the number of permits given to build high-rise apartments, which now account for 31 per cent of the total, up from 11 per cent six years ago, according to government data.
China has become the largest source of foreign money flowing into Australian real estate, with Chinese investment in residential property up by more than 60 per cent to $8.7 billion in the year through June 2014, a Credit Suisse analysis of government data shows.
Earlier this year, when Andrew Leoncelli, a managing director at real-estate group CBRE Group, heard that one of China’s wealthiest businessmen was looking for a trophy asset, he knew he had just the right property in Melbourne: Singapore-based World Class Land’s glitzy skyscraper, which is set to become the tallest residential building in the southern hemisphere. His Chinese client snapped up the tower’s highly prized penthouse for $25 million — the most expensive apartment ever sold in Australia. It spans the entire 100th floor and has above-the-cloud views.
Developers such as Crown remain guarded about discussing the importance of Asian buyers for their business at a time of public anxiety over Chinese investment in Australia. But in a sign of their growing sway, Australian architects have begun applying feng-shui designs to cater to Asian tastes. That includes converting swimming pools into “koi ponds” and eliminating the number four — considered unlucky by some Chinese — in floor plans and lifts.
Real-estate agents have set up special concierge services courting Chinese investors. Some work with migration agents based in China and other middlemen to tap into their networks and lure potential buyers. Billboards and videos promoting Australian apartments — in locations such as Sydney’s main airport — are frequently subtitled in Mandarin.
“In this increasingly competitive market, brands need to be smarter if they want to remain attractive to Chinese consumers,” said Brian Buchwald, chief executive at Bomoda, a New York-based strategy consultancy specialising in China.
Australia is now the second-most-popular target market for Chinese property investors after the US, according to search data from Juwai.com, a popular international real-estate portal in China.
[Image: 208758-170b3afc-7793-11e5-b642-5d72264fdbf2.jpg]
An artist’s impression of the building.
“It’s about location, education and the prospect of maybe being able to migrate here,” said Erin van Tuil, international marketing director at real-estate agency Knight Frank in Sydney.
“What really lures Chinese is that Australia is seen as a safe haven,” said Ms van Tuil, who brought hundreds of plush-toy koalas as a gift to potential buyers at a recent sales event in Beijing.
A sharply weaker currency has added to the appeal. While Australian houses and apartments are increasingly unaffordable to locals, their prices have actually fallen by 13 per cent in Chinese yuan terms over the past year, said Paul Bloxham, chief economist for HSBC in Sydney.
Among the headwinds, however, are slowing population growth and fewer foreign students coming to Australian colleges than expected, removing two key sources of new apartment demand. Local demand is cooling, too, amid a regulatory clampdown on investors buying houses as a bet on rising prices rather than as a place to live.
“By Easter next year it will be quite clear that the housing story will be one of excess, not expansion,” said ANZ’s Mr Hogan. “A key uncertainty is foreign demand.”
Deal makers remain optimistic, however.
“The last six weeks have been breathtaking in terms of just how aggressive Chinese buyers have been to secure our stock,” said Mark Wizel, a senior director at CBRE in Melbourne. “From office buildings to supermarkets, from development sites to strata offices, the Chinese have hit hard on all forms of assets and sent a clear message to the market that they are here to stay.”
- VERA SPROTHEN
- THE WALL STREET JOURNAL
- OCTOBER 21, 2015 8:02AM
[Image: 938791-0341d3f6-7792-11e5-b642-5d72264fdbf2.jpg]
Model Megan Gale with Liana and Iwan Sunito of Crown Group at the Infinity launch, Sydney. Source: Supplied
[b]It used to be Hollywood that staged red-carpet premieres to promote blockbuster movies. Now, real-estate developers in Australia are using the same tactics to sell glitzy apartments to Asia’s rich.[/b]
Crown Group Holdings recently treated about 1500 guests to an exclusive preview of its yet-to-be-built Sydney residences — a shimmering 20-storey complex dubbed “Infinity” worth about $575 million. Fashion label Armani sponsored the event, Swarovski displayed jewellery and Jack Daniel’s served a limited-edition whiskey.
The extravaganza, repeated in Singapore and Jakarta, helped Crown sell all but two of the development’s 326 apartments in a single day in September.
Among those drawn in by such spectacles are wealthy Chinese, who are helping fuel a residential construction boom that has been shielding the Australian economy from recession as the nation’s long mining boom ends. Cranes dominate skylines above Sydney and Melbourne, which are popular with Asian migrants. Current rules generally only allow foreign investors to buy real estate before construction, typically in apartment developments.
Start of sidebar. Skip to end of sidebar.
End of sidebar. Return to start of sidebar.
Cracks are emerging in the market, however. On Friday, the Reserve Bank warned that risks to residential property developers had risen over the past six months, with inner-city Melbourne and Brisbane particularly exposed to a supply glut of apartments.
The central bank has previously warned that any sudden collapse in home prices risks destabilising the nation’s banks and the economy, which grew by just 0.2 per cent in the second quarter from the first, the slowest pace in four years.
“People underestimate how much residential construction has been propping up the economy,” said Warren Hogan, chief economist at ANZ.
[Image: 938820-0904b056-7792-11e5-b642-5d72264fdbf2.jpg]
Infinity at Green Square.
Approvals to build new dwellings hit an all-time high in the year through August, as did the number of permits given to build high-rise apartments, which now account for 31 per cent of the total, up from 11 per cent six years ago, according to government data.
China has become the largest source of foreign money flowing into Australian real estate, with Chinese investment in residential property up by more than 60 per cent to $8.7 billion in the year through June 2014, a Credit Suisse analysis of government data shows.
Earlier this year, when Andrew Leoncelli, a managing director at real-estate group CBRE Group, heard that one of China’s wealthiest businessmen was looking for a trophy asset, he knew he had just the right property in Melbourne: Singapore-based World Class Land’s glitzy skyscraper, which is set to become the tallest residential building in the southern hemisphere. His Chinese client snapped up the tower’s highly prized penthouse for $25 million — the most expensive apartment ever sold in Australia. It spans the entire 100th floor and has above-the-cloud views.
Developers such as Crown remain guarded about discussing the importance of Asian buyers for their business at a time of public anxiety over Chinese investment in Australia. But in a sign of their growing sway, Australian architects have begun applying feng-shui designs to cater to Asian tastes. That includes converting swimming pools into “koi ponds” and eliminating the number four — considered unlucky by some Chinese — in floor plans and lifts.
Real-estate agents have set up special concierge services courting Chinese investors. Some work with migration agents based in China and other middlemen to tap into their networks and lure potential buyers. Billboards and videos promoting Australian apartments — in locations such as Sydney’s main airport — are frequently subtitled in Mandarin.
“In this increasingly competitive market, brands need to be smarter if they want to remain attractive to Chinese consumers,” said Brian Buchwald, chief executive at Bomoda, a New York-based strategy consultancy specialising in China.
Australia is now the second-most-popular target market for Chinese property investors after the US, according to search data from Juwai.com, a popular international real-estate portal in China.
[Image: 208758-170b3afc-7793-11e5-b642-5d72264fdbf2.jpg]
An artist’s impression of the building.
“It’s about location, education and the prospect of maybe being able to migrate here,” said Erin van Tuil, international marketing director at real-estate agency Knight Frank in Sydney.
“What really lures Chinese is that Australia is seen as a safe haven,” said Ms van Tuil, who brought hundreds of plush-toy koalas as a gift to potential buyers at a recent sales event in Beijing.
A sharply weaker currency has added to the appeal. While Australian houses and apartments are increasingly unaffordable to locals, their prices have actually fallen by 13 per cent in Chinese yuan terms over the past year, said Paul Bloxham, chief economist for HSBC in Sydney.
Among the headwinds, however, are slowing population growth and fewer foreign students coming to Australian colleges than expected, removing two key sources of new apartment demand. Local demand is cooling, too, amid a regulatory clampdown on investors buying houses as a bet on rising prices rather than as a place to live.
“By Easter next year it will be quite clear that the housing story will be one of excess, not expansion,” said ANZ’s Mr Hogan. “A key uncertainty is foreign demand.”
Deal makers remain optimistic, however.
“The last six weeks have been breathtaking in terms of just how aggressive Chinese buyers have been to secure our stock,” said Mark Wizel, a senior director at CBRE in Melbourne. “From office buildings to supermarkets, from development sites to strata offices, the Chinese have hit hard on all forms of assets and sent a clear message to the market that they are here to stay.”