Chinese action continues with half-stake in Liverpool St tower

Shimao is selling a half stake in 175 Liverpool Street in Sydney.

Shimao Group, controlled by Chinese-Australian billionaire Hui Wing Mao, is joining the ranks of Chinese property players selling Sydney towers by offering a half stake in its $800 million-plus tower next to Hyde Park. 

Chinese developers are at the tail end of a buying spree that saw them pick up major towers across capital city markets and some, most notably Dalian Wanda and HNA Group, have sold out.

Shimao insists it remains committed to the local market ­although the billionaire has switched to pursuing agricultural assets and could sell a stake in the 31-level tower at a profit after paying $392 million for it four years ago.

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The leap in office rentals and potential for it to be converted into luxury apartments, along with the broad lift in the market that goes well beyond Chinese buying, could make the sale one of the year’s most lucrative.

The office block at 175 Liverpool St has long been touted for its dress-circle position near Hyde Park and a northerly aspect that could suit residential developers. But many of the recent blocks that have sold in the area have gone to office players like Charter Hall, which could assist with a commercial repositioning.

While some mainland groups have come under pressure to repatriate funds from luxury projects, Shimao has steered clear of glitzy spending and instead backed low-profile suburban commercial and unit projects or chased agricultural deals.

Hui last year bought ­advertising doyen Harold Mitchell’s cattle station empire, which spans about 1.4 million hectares and more than 45,000 head of cattle, for about $70 million. The Australian citizen has been listed as the eighth wealthiest person in Australia, but is best known as one of China’s business elite.

Shimao chairman Hui Wing Mao. Picture: Bloomberg

Shimao last year added a controlling stake in NSW-based Bindaree Beef Group, one of the country’s biggest meat processing businesses. Two years ago it ­revealed it was an early bidder for the country’s largest landholder, S. Kidman & Co.

More recently it was named as one of several Chinese outfits showing a significant interest in the Consolidated Pastoral Company cattle empire. But the company, which operates 16 cattle stations valued at $1 billion, ­appears headed for a break-up.

The tower sale, being handled via an off-market process by CBRE, is aimed at capitalising on the jump in Sydney CBD commercial rent forecasts, as well as the premium residential market.

CBRE’s Sharon Yang and James Parry say the campaign has generated strong preliminary interest from local and offshore groups. “The asset is perfectly ­positioned to capitalise on today’s favourable market fundamentals,” Yang says.

The 48,877sqm tower is fully leased and 90% of tenants are either blue-chip companies, including Telstra, or NSW and federal government departments.

Shimao International’s Jerry Li says the sale plans “provide an opportunity for us to partner with a like-minded investor and share in the building’s future upside as Sydney’s market fundamentals continue to strengthen”.

CBRE says the building could capture the next upswing in Sydney’s residential market, coinciding with the asset’s major tenant expiries in 2024.

“Over recent years, multiple luxury residential developments, hotel additions and dynamic urban spaces have been completed in the surrounding precinct,” Yang says. She says the Liverpool St tower “holds the box seat as the anticipated availability of these sites become scarce”.

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