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06-10-2014, 10:34 PM
Patience seals Sino deals
Matthew Cranston
456 words
7 Oct 2014
The Australian Financial Review
AFNR
English
Copyright 2014. Fairfax Media Management Pty Limited.
Of the billions of dollars in Chinese funds pouring into Australian real estate, most vendors say one ingredient helps to ensure the money is converted into a deal – and that is patience.
In mid-2013 the Tianjin-based General Nice Group, which has a global annual revenue of $US8 billion ($9.2 billion), bought an A-grade building in North Sydney from Investa Commercial Property Fund.
However, for General Nice, which also happens to be one of the largest importers of coking coal in China, regulations on the flow of capital had created difficulties in the attempt to buy the 8171-square-metre tower.
"With complications in financial markets in China, the deal and the deposit were fading quickly," Investa's Michael Cook said.
The deal looked destined for the scrap heap. But Mr Cook, who met General Nice in China and understood the pressure the company faced, remained loyal to the buyer.
"You need unprecedented levels of patience," Mr Cook said. "If you have confidence in your buyer and your process, you also have to be confident in them to get their house in order, no matter how many twists and turns."Patience rewarded
Eventually, a deposit for the office tower was locked in, albeit at a fraction of the first figure which Investa has declined to detail. But Investa's patience was rewarded, the deal went ahead, and General Nice bought the office tower for more than $50 million.
CBRE's Rick Butler has dealt with Chinese investors since 1983 when he sold property in Sydney's Chinatown.
"The Asian cultures are all very different," he said. "The Chinese do business in a different way – they calculate in a different way.
"The patience factor is crucial, but in saying that some of them are like lightning and deals can go through very quickly."
Mr Butler advised Chinese-backed Bright Ruby, which has gone on to buy $260 million in office towers in Australia.Eye on passive income
While better known Chinese buyers, such as Greenland Group, have been focused on buying development sites, others such as the Hong Kong Monetary Authority and Ping An have been looking to buy passive income assets such as office towers.
Both those investors made bids on QIC's 52 Martin Place, which was the largest office tower transaction in Sydney for five years.
Chinese groups have also taken to Australian farming assets where there have also been drawn-out campaigns.
Chinese group Orient Agriculture emerged as the buyer of a major Queensland cropping property for $30 million this week. The property had been on the market for more than a year and another Chinese buyer had been unable to secure funding.
Fairfax Media Management Pty Limited
Document AFNR000020141006eaa70003b
Matthew Cranston
456 words
7 Oct 2014
The Australian Financial Review
AFNR
English
Copyright 2014. Fairfax Media Management Pty Limited.
Of the billions of dollars in Chinese funds pouring into Australian real estate, most vendors say one ingredient helps to ensure the money is converted into a deal – and that is patience.
In mid-2013 the Tianjin-based General Nice Group, which has a global annual revenue of $US8 billion ($9.2 billion), bought an A-grade building in North Sydney from Investa Commercial Property Fund.
However, for General Nice, which also happens to be one of the largest importers of coking coal in China, regulations on the flow of capital had created difficulties in the attempt to buy the 8171-square-metre tower.
"With complications in financial markets in China, the deal and the deposit were fading quickly," Investa's Michael Cook said.
The deal looked destined for the scrap heap. But Mr Cook, who met General Nice in China and understood the pressure the company faced, remained loyal to the buyer.
"You need unprecedented levels of patience," Mr Cook said. "If you have confidence in your buyer and your process, you also have to be confident in them to get their house in order, no matter how many twists and turns."Patience rewarded
Eventually, a deposit for the office tower was locked in, albeit at a fraction of the first figure which Investa has declined to detail. But Investa's patience was rewarded, the deal went ahead, and General Nice bought the office tower for more than $50 million.
CBRE's Rick Butler has dealt with Chinese investors since 1983 when he sold property in Sydney's Chinatown.
"The Asian cultures are all very different," he said. "The Chinese do business in a different way – they calculate in a different way.
"The patience factor is crucial, but in saying that some of them are like lightning and deals can go through very quickly."
Mr Butler advised Chinese-backed Bright Ruby, which has gone on to buy $260 million in office towers in Australia.Eye on passive income
While better known Chinese buyers, such as Greenland Group, have been focused on buying development sites, others such as the Hong Kong Monetary Authority and Ping An have been looking to buy passive income assets such as office towers.
Both those investors made bids on QIC's 52 Martin Place, which was the largest office tower transaction in Sydney for five years.
Chinese groups have also taken to Australian farming assets where there have also been drawn-out campaigns.
Chinese group Orient Agriculture emerged as the buyer of a major Queensland cropping property for $30 million this week. The property had been on the market for more than a year and another Chinese buyer had been unable to secure funding.
Fairfax Media Management Pty Limited
Document AFNR000020141006eaa70003b