Chinese development giant Country Garden has stamped its mark on the Melbourne housing market with just one deal after paying a record $400 million for a 363-hectare site in the city’s west.
The site on Black Forest Road in Wyndham Vale, in the booming western growth corridor, was put up for sale by ASX-listed property minnow Phileo Australia in May to take advantage of surging residential land and retail lot prices as developers struggled to keep up with new housing demand.
Phileo paid just $14.5 million for the rural property in November 2004.
The site had a May 2016 book value of $120 million but its true value has skyrocketed since being rezoned for residential development by the state government and receiving a planning permit in February last year.
The landholding 40 kilometres west of the CBD could support up to 5000 dwellings and about 20,000-25,000 residents. Country Garden’s acquisition is conditional on it receiving Foreign Investment Review Board approval.
The deal marks Country Garden’s return to its speciality – community building – having entered the Australian market initially as an apartment developer.
Its first project in Sydney was the Ryde Garden apartment project but the mega-developer is more attuned to suburb building as it has done in its resident city, Guangzhou in southern China. Those projects came with roads, freeways, schools and hospitals.
“We are excited at the prospect of delivering our first major greenfield community in Australia and we remain committed to developing high-quality housing for all Australians,” Country Garden Australia managing director Guotao Hu said.
The deal eclipses last December’s $360 million land acquisition by another Chinese heavyweight, Dahua Group, which snapped up three sites on Aviation Road, Point Cook Road and Hacketts Road in Point Cook in Wyndham with the potential for more than 3000 housing lots.
Hong Kong-listed Country Garden Holdings will pay for the Wyndham Vale site in stages over the next four-and-a-half years with final settlement due in 2022.
Malaysian-born managing director Rudy Koh is the biggest shareholder in Phileo with a 36 per cent stake. The board holds over 60 per cent of the stock in the media-shy company. Phileo’s other investments include a 30-storey Collins Street office tower, hotel and land parcel in Box Hill.
One shareholder told The Australian Financial Review the company’s profit on the land sale equated to about $13 a share. But they also noted that in “typical fashion” the company’s announcement made no mention of carrying cost or profit.
Knight Frank’s Danny Clark and Michael Hede, together with RPM Real Estate Group, Rudy Kelemen of Kelemen Real Estate and Deloitte Real Estate were appointed to market the property in May.
Asian developers have dominated major land acquisitions in Melbourne in the past 18 months as concerns about the CBD and Docklands apartment market have intensified.
Last year, China’s Fucheng Group paid about $100 million to acquire the last remaining 4953-hectare parcel of the Baillieu family’s Woodhouse Station while another Chinese developer New Sky paid about $60 million for a 64-hectare housing project in Tarneit – also in the west – with approval for 800 lots,
In April, Melbourne developer Wolfdene partnered with the Asian-backed Blueways Group to acquire a 35-hectare residential site in the city’s south-east for about $40 million.
Figures compiled by project marketers Red23 show the Melbournes median land price has rocketed to a new peak of $276,000 in June with prices up $36,100 this calendar year – about $1800 per week.