Foreign builders ‘feeling heat’

Many foreign developers are under pressure to sell property sites, says JQZ director Jianqiu Zhang.

JQZ’s Grand Central project in Homebush near Sydney Olympic Park.

Many foreign developers, particularly from China, have paid too much for development sites in speculative acquisitions over the past few years with pressure mounting to sell the properties, according to JQZ director Jianqiu Zhang.

Mr Zhang also said speculative purchases by home buyers had led to the overheating of Sydney’s apartment market, but ruled out a market crash. Instead, he expects three to five years of stabilisation.

JQZ, founded in Sydney by the China-born Mr Zhang, said he had been approached by other developers who were trying to resell their sites.

“Many of them don’t have the local know-how, especially any idea about related market risks. They were too rash in making those acquisitions and they paid too much,” Mr Zhang said.

“I have been approached by at least seven or eight projects. If they can’t sell, those projects can’t start either.”

JQZ has had a project pipeline over the past six years with an end value of close to $4 billion. It is currently building about 2000 apartments, with plans for another 3000.

It is believed that JQZ is circling an office park alongside the expanded Macquarie shopping centre in Sydney’s Macquarie Park precinct sold by Goodman Group. The property, priced at more than $100 million, can yield more than 600 apartments.

Earlier this year, the company was in the final round of bidding for a property at 80 Waterloo Road just opposite the Macquarie shopping centre, sold by the unlisted Centuria Property Funds. The site was finally bought by Melbourne-based developer Golden Age for $101m.

Mr Zhang declined to comment on the Goodman deal, but said location was his first priority in site acquisitions. “We started with a small project in Parramatta, followed by Homebush, and then closer to city,” he said. “We like locations within 20 minutes’ drive from the city.”

All of JQZ projects are in Sydney, where the company will continue its focus in the near term. Its largest development under construction is the stage 1 of Grand Central in Homebush at 2-20 Parramatta Road, close to the Sydney Olympic Park, which comprises 430 apartments and 1800sq m of retail.

JQZ is also marketing the Reserve project in Zetland, with more than 70 per cent of the 343 apartments already sold.

Mr Zhang said JQZ had strict controls on the ratio of foreign buyers in all its projects, in keeping with banks’ restrictions on offshore buyers. “We have about 10 per cent of buyers from overseas in each of our projects. There is no problem with those projects in settlements.”

“The banks are right in scrutinising lending to overseas buyers,” he said. “In recent years the market has overheated not only because of demand from owner occupiers, but due to speculative buying on the back of rising ­prices, which is dangerous.”