Mitsubishi, Ping An in for Lend Lease Circular Quay Tower

Japanese property house Mitsubishi is being courted as a capital partner for Lend Lease’s proposed Circular Quay Tower.

An artist’s impression of Lend Lease’s George Street public plaza, part of the Circular Quay proposal.

One of Japan’s largest property houses, Mitsubishi, has emerged, alongside China’s Ping An Insurance, as the parties being courted as capital partners for Lend Lease’s proposed Circular Quay Tower.

The move may see the groups team up to invest in the $1.5 billion tower that Lend Lease has proposed on the site, with the developer seeking a major precommitment before it begins.

Japanese companies are boosting their offshore investments as they seek to diversify globally into higher growth international markets, and they are already investors in Australian wholesale funds that own top city towers.

Japanese pension funds that are seeking to place money in international real estate have already stuck big ticket deals in London and in gateway cities in the United States.

Any move by Mitsubishi would be significant as it would see Japanese institutional capital take a direct stake in an Australian commercial property project for the first time in years as well as marking a return to Sydney CBD.

The Japanese group has been active in Australia this year. Mitsubishi Corp was part of the Canberra Metro consortium alongside Pacific Partnerships, Chinese-owned John Holland and British group Aberdeen Infrastructure Investments that won the concession for Canberra’s light rail under a public-private partnership scheme.

Both Mitsubishi Corp, which operates as a traditional conglomerate, and property arm Mitsubishi Estate, which has office, retail, residential and hotel businesses, may be involved.

The corporate arm invested in a residential development project in Vietnam in July and both units invested in a mixed-use redevelopment project in downtown Yangon, Myanmar, in the same month.

Ping An’s involvement could mark a shift by Chinese investors into forward-funding major projects as competition for premium office towers heats up.

In front of the proposed tower, Dalian Wanda is proposing a landmark hotel and apartment complex, and nearby the Poly Group is planning to develop an A-grade office tower on George Street.

The proposed Lend Lease tower drew a number of groups. The Japanese group declined to comment but Mitsubishi has a history with the developer and has worked with it on office and apartment projects around the world, including in Britain.

The developer declined to comment but garnering a capital partner would signal its commitment to the project, for which it has won a dramatic height increase, and may also assist with the hunt for an anchor tenant.

The height of the next-generation office tower at Circular Quay was lifted as Lend Lease contends with the bulked-up $1bn Wanda One project.

Lend Lease has long aspired to develop a major building on its part of the precinct bounded by Alfred, Dalley, Pitt and George streets, with the 248m office tower at 182 George Street to be one of the city’s tallest.

Lend Lease has proven adept at winning capital partners and sold slices of the office towers at Sydney’s Barangaroo South to global heavyweights including Qatar Investment Authority and the Hong Kong Monetary Authority, as well as Australian superannuation funds.

Lend Lease has had real estate agent JLL assist in the hunt for a joint venture partner to develop the office building on its site. Cbus Property last June entered exclusive due diligence to buy the entire site for about $300m but later pulled back from a deal.