One of the early movers among Chinese developers in Australia remains optimistic about its long-term prospects, despite rapidly falling foreign investment in real estate and challenges emerging for investor finance.
A foreign developer entering a new market with a proposal bigger than anything that’s ever been built may seem like an overly optimistic plan.
But for Greenland Australia, making a Sydney property debut with the city’s tallest residential building was not baseless bravado, it was simply standard operating procedure.
Established in China in 1992, Greenland Holdings Group is one of the People’s Republic’s most prolific developers, with projects in 90 Chinese cities, including Shanghai, Beijing, Hong Kong, Chongqing and Guangzhou.
Greenland has established operations in 13 cities in nine countries, including the United States, Canada, the United Kingdom, Germany, Spain, South Korea, Thailand and Malaysia.
Alongside some of the world’s biggest buildings, Greenland’s international portfolio includes more than 70 luxury hotels, operated by some of the world’s top hotel brands, including Ritz Carlton and Marriott as well as six bespoke in-house brands.
Greenland, which holds an asset value of more than $US130 billion ($181 billion) and is listed on the Shanghai Stock Exchange, has appeared in Fortune magazine’s Global 500 list for the past seven years, rising to 252nd in 2018.
In Australia, its portfolio has quickly swelled since landing in 2013 to comprise seven projects with a collective end value of more than $2 billion.
Its Australian showpiece is Sydney’s Greenland Centre, a 67-storey, 235-metre tower that will become the city’s tallest residential building once completed, and its third-tallest building overall, behind commercial complexes Deutsche Bank Place and the Citigroup Centre.
Designed by local architecture firms BVN and Woods Bagot, and being built by Probuild, the Greenland Centre embodies the developer’s desire to make an immediate impact in new markets, Greenland Australia managing director Sherwood Luo said.
“Where we enter a new market, we seek to secure iconic sites to develop landmark buildings,” Mr Luo told Australia China Business Review.
Since its foundation, Greenland has become synonymous with super high-rise development, with 23 buildings of more than 300 metres tall under construction or completed around the world, four of which are ranked in the world’s top 10 in height.
While Australian planning policies do not permit development of such height, Mr Luo said Greenland Australia had nonetheless focused on developing a multi-faceted community at each of its sites.
“In China, our developments are quite different in comparison to projects in Australia,” he said.
“If we consider the size of the project, in China because of the huge population, most projects are a large size, sometimes up to a million square metres.
“We are creating new communities for a city’s growth.
“But we have learned something from this kind of large-scale development.
“We found that if we can provide more convenient facilities for the purchaser, the project will become more popular and become more liveable for the future occupants.”
The ‘create better living’ philosophy, Mr Luo said, had been Greenland’s trademark since it was established in 1992 as a state-owned enterprise in Shanghai.
At Greenland Centre, Mr Luo said a $25 million, 2,000-square metre creative hub would provide dance, theatre, music film and visual facilities alongside resident amenities that included a full-range supermarket, convenience stores, medical facilities and a child-care centre.
The Greenland Centre also complements the first project Greenland completed in Australia – the neighbouring Woods Bagot-designed heritage restoration of the original 1939 art deco building at 339 Pitt Street, which was opened in December 2015 as the Primus Hotel.
Another of Greenland Australia’s projects, the 19-level, 135-apartment luxury Omnia, has been designed to be a new entrance statement for the rapidly gentrifying Potts Point-Kings Cross entertainment precinct.
Two-storey penthouses will cater to premium buyers at Omnia, who will also be given the opportunity to entertain guests at a dedicated entertainment room and store fine wines in a private cellar.
“When we design a building, we work with our consultants, our architects and engineers to try to find out what will be most suitable for the site, and for the potential future lifestyle of our purchasers,” Mr Luo said.
“So, when people move in, they will be living in a very good environment and they will enjoy living there,” he said.
Mr Luo, who has a master’s degree in architecture from Tongji University in Shanghai, said Greenland Australia’s better living strategy also involved the appointment of local planning, design and architecture firms.
Alongside Woods Bagot, Greenland Australia has worked with renowned local architecture firms Durbach Block Jaggers, Architecutus, KANNFINCH, WMK Architecture and Bates Smart.
“My architectural background provides me with a better understanding of the ideas that the architect presents and provides a better understanding of how people will live in and use the building and how they will enjoy the living environment,” Mr Luo said.
“But we also believe that local smarts can bring more benefits to the local people and the local market.
“Local people have a better understanding of the culture and the environment and the climate.
“We respect this local wisdom and work with local consultants to deliver the project.”
Mr Luo said Greenland Australia would continue to focus its efforts on Sydney’s development market, while also evaluating potential opportunities in Melbourne and Brisbane.
“Greenland regards Australia as a long-term strategic investment destination,” he said.
“We are still focused mainly on the Sydney market, which has changed a little bit from last year until now, I believe it is become a more normalised market.
“The previous several years, the market had become too hot, and it may take some time to adjust.
“But from a long-term point of view, property markets in Australia’s major cities are still at a healthy level, so we will continue to treat Australia as a strategic destination for investment.”
While Greenland Australia has been largely insulated from China’s capital outflow restrictions, thanks to its early market entry and the ability to recycle capital from its initial projects, Mr Luo said a short-term challenge for the company was dealing with changes in Australian government policy towards foreign buyers.
Foreign investment in Australian real estate has plunged in recent years, following the introduction or increase of fees relating to offshore purchasers.
The latest Foreign Investment Review Board statistics, for the 2016-17 financial year, indicated that foreign investment in Australian property fell by $47 billion as compared with the previous year, including a $16.6 billion fall in the value of properties sold to Chinese investors.
At the time of release, the FIRB blamed the introduction of new fees as the main reason behind the fall, but at the same time, foreign buyer surcharges have either been increased or installed in every Australian jurisdiction other than Tasmania and the Northern Territory.
While acknowledging the short-term impacts as borne out in the figures, Mr Luo remained optimistic the situation would resolve itself in the long term.
“The 4 per cent additional surcharge (in New South Wales) may not be a significant barrier for people who believe Australia is the right property investment for them,” he said.
“But I have noticed that another more significant difficulty for overseas buyers is bank policies, and not being able to be able to provide funding for debt.
“If we can somehow modify this policy, on the condition that the potential buyer can provide proof that they are very healthy financially, that will help more investors come into the market, and also protect the banking system.”