JLL has released a report identifying at least 10 Chinese investors and developers that are ready to enter the Australian property market.
Although there has been evidence of a recent cooling in the market and both Australia and China have tightened regulations, JLL believes the Chinese are still bullish on Australian real estate.
“Australia continues to be a major investment destination for Chinese capital and many Chinese real estate companies are serious about having some footprint in Australia,” Michael Zhang, JLL’s Head of China Desk told the Australian Financial Review (AFR).
In the report, titled The Future of Chinese Residential Developers in Australia, JLL identified China’s 10 largest residential developers yet to enter the Australian market.
Of the ten, seven are from Hong Kong (China Merchants Group, Sun Hung Kai, Cheung Kong Property Group, Henderson Land, China Resources, Wheelock and Co., New World Development), and one each are from Shenzhen (China Vanke), Guangzhou (Evergrande) and Beijing (Longfor).
The 10 companies have a combined average market cap of just under $40 billion. The largest company is transportation company China Merchants group which has a cap of $115 billion.
The report says that Chinese developers commonly adopt a “marquee strategy”, which involves kicking off entry into a new market with a marquee project.
For example, China Vanke entered the U.S. market via a 656 unit development in 2013 and Dalian Wanda launched in Sydney by purchasing a site opposite the Sydney Harbour Bridge.
The report also notes that Hong Kong developers are likely to draw on their experience delivering high-rise apartments, given the extreme density of their own city.
Despite Juwai forecasting a decline in Chinese spending on property this year (from $133.7 billion in 2016 to an estimated $104.5 billion in 2017), Zhang remains optimistic.
“Australia continues to be a major investment destination for Chinese capital,” he told the AFR. “Australia’s average deal size is smaller than that of the US and the UK, which makes investing here accessible to investors of all sizes.”