Property developers backed out of China and Hong Kong are pushing on with some of Melbourne’s biggest residential projects, amid declining investor activity and high levels of supply.
In recent years, Melbourne has emerged as a favourite destination for Chinese property buyers, attracted by the city’s prestigious universities and cultural offerings, as well as a lower price of entry than Australia’s hottest real estate market, Sydney.
But a report by global property agency JLL indicated buyers in Melbourne, particularly the inner city, had become increasingly selective in response to negative commentary around high levels of apartment supply.
“Anecdotally, over the past 12 months most developers have reported sharply declining interest from offshore purchasers,” JLL said in its latest Melbourne Apartment Market report.
“This was confirmed in the recently released FIRB (Foreign Investment Review Board) data, which showed a 67 per cent decline in the value of approvals for residential property in 2016-17.
“A variety of factors have contributed to this, including the halt on foreign investor lending by local banks, increased tax imposts by state and federal governments and the tightening of capital controls in China.”
Despite the uncertainty, JLL’s report showed construction started on a handful of major projects in the past three months, boosting the number of apartments under construction in the city to more than 19,600.
Data from property market analytics group Urban shows China- or Hong Kong-backed developers 3L Alliance, Far East Consortium, Aurumstone Group, Hengyi Australia, Dahua Group, Century Group Australia, Newsky Group and a joint venture between Growland Group and Poly Developments Australia make up a big chunk of that pipeline.
Urban, which compiles Australia’s largest database of new building developments, said that group of developers collectively had 5,840 apartments under construction in Melbourne, with a further 1,466 being actively marketed.
One of the biggest China-backed projects on Urban’s database, 3L Alliance’s $1 billion Queens Place, was one of the recent construction starts, with building giant Multiplex staring work on the first stage of 815 apartments in late June.
Queens Place, located on a prominent site in Melbourne’s CBD which was acquired by 3L alliance in 2014 for $135 million, comprises a pair of 80-storey towers atop a retail and commercial precinct, including laneway shops and restaurants.
Jointly designed by Cox Architecture, Fender Katsalidis Architects and Hecker Guthrie, Queens Place also includes a range of luxurious lifestyle amenities, including private cinemas, a library, a poker and mahjong room, a cigar bar and a karaoke suite.
Multiplex is also building Hengyi Australia’s Swanston Central, 72-storey, 1,035-apartment tower, which will be the tallest Melbourne building outside of the CBD once completed.
Hengyi, a subsidiary of mainland China developer Shandong HYI, is expecting the first stage of settlements at the project, which is in Carlton, to occur within months.
Hong Kong-owned Far East Consortium is responsible for another mega Melbourne project, with its $2.6 billion, 2,600-dwelling complex, West Side Place, being built by Probuild.
West Side Place, a four-tower behemoth designed by Cottee Parker, will create the tallest hotel in the southern hemisphere once completed, with a 263-room Ritz-Carlton hotel in the top levels of the project’s biggest tower, which will soar to an impressive 81 levels.
Century Group Australia is also bringing a world-renowned luxury hotel brand to Melbourne in a major apartment project, with its $800 million Flinders Bank to comprise 500 apartments alongside a St Regis Resort on the banks of the Yarra River.
Another big project, Dahua Group’s $300 million Hawthorn Park, moved into the construction phase in July, with local building outfit Hickory appointed as head contractor.
Hawthorn Park comprises 368 apartments to be built on a 12,282-square metre site in Hawthorn East.