China’s Aoyuan Group latest developer to exit Australia
The exodus of Chinese developers from the local property scene is picking up pace with Hong Kong-listed China Aoyuan Group handing over control of its local operation in a move that will see it take a $245m loss.
The once booming cohort has been slammed by the slowdown in China’s property market and Aoyuan is heavily indebted, prompting it to put its local operations on the chopping block.
Rivals including Poly, Greenland and Shimao have also put assets up for sale as the property cycle turns against them.
Aoyuan has undertaken projects across Sydney and in the NSW Southern Highlands since launching locally in 2015.
It has been part of projects including One30 Hyde Park in the Sydney CBD and in 2019 unveiled a deal to take over developer Capital Bluestone, which was undertaking the Woolooware Bay Town Centre.
Aoyuan will exit via a structured deal in which it will sell a stake in the Australian operation to its local manager and undertake a debt restructure that will see it recoup about $105m.
Chinese developers have been hit in recent years by a combination of capital controls and political tensions, as well as the downturn in the apartment market, which has cramped their ambitions.
Aoyuan sought to sell its entire Australian portfolio for immediate cash inflow and called for offers via its own business network and financial intermediaries.
The company made the deal to exit with Adrian Liaw, president of Aoyuan International Group, who heads its local operations, selling a 49 per cent interest to his companies.
The sale will enable the Australian business to go on without being impacted by any liquidity issues currently faced by its parent.
The local unit’s projects comprise about 300 apartment units and three land parcels in and around Sydney. The portfolio includes the fourth stage of the Woolooware Bay project which was slated to have 255 apartments over five buildings.
The company is also selling lots in a major land estate at Moss Vale in Sydney’s Southern Highlands. Aoyuan has branded the 123.7ha project as Ashbourne.
In Sydney, it completed The Lennox building in Parramatta which has about 425 apartments. Other developments include Mesa in Hurstville, Adela in Burwood, and Altessa in Gordon.
Chinese developers have been hamstrung as they have been unable to pump cash into their Australian operations.
Mr Liaw said the news would provide the company’s partners and buyers “peace of mind”. “They can be reassured that we have both the capacity and the commitment to completing our portfolio of projects to the high standard we’ve always promised,” he said.
Aoyuan’s loans to its local unit stood at about $384.6m but the return it received fell well short.
Aoyuan admitted to liquidity pressures and difficulty in accessing typical financing channels amid the negative real estate market in China and tight national macro-control policies put in place since 2021.
“If it were given more time, it might be able to ride over to become a mature developer with more profitability,” the company said.
“However, the Group’s liquidity issue does not allow it to plough in additional funding.”
Aoyuan said it would take a $245.9m loss.