Stockland’s China visit gauges interest in Australian property

The group spent two days each in Shanghai and Beijing meeting business people, economists, diplomats and others.

Stockland chief executive Mark Steinert. Picture: Glenn Hunt

The entire board and executive committee of Stockland, Australia’s largest diversified property group, spent four days in China last week assessing the local appetite for continuing investment in Australian real estate and the health of the Chinese economy more broadly.

While Mirvac has recently signed an apartment complex ­arrangement with Chinese ­insurer Ping An, Stockland has not clinched any deal with a Chinese counterpart.

The group spent two days each in Shanghai and Beijing meeting business people, economists, diplomats and others.

Simon Shakesheff, Stockland’s head of strategy and stakeholder relations, said the principal reason for the visit was the rise in significance of Chinese buyers of Australian real estate over the past two years.

“It was an educative trip,” Mr Shakesheff said. “We gained a better understanding of the ­motivation of the buyers and of the way they buy, and of the likelihood of any change in the Chinese regulatory regime, of whether they might turn off the tap. The risk factors are around capital controls.

“The feeling we gained is that Australian real estate is relatively cheap compared with first tier cities in China. The concept of title which is perpetual, as opposed to 70 year leasehold in China, the rule of law, the relatively clean ­environment and education ­facilities are all draws. We didn’t get the ­impression that investment in Australian real estate is about making a quick profit.”

Stockland mainly sells land packages rather than developing apartment complexes, and Chinese buyers have mostly been ­attracted to the latter.

About 250 of the 6000 land packages Stockland sold last year were bought by Chinese.

Mr Shakesheff said Stockland, like many other Australian developers, used the Ausin Group as its principal selling agent in China.

The Stockland group travelled to the south of Beijing to inspect an aged care sales centre that is run by China Life Insurance, the country’s biggest life insurer, and met senior executives.

Stockland is the third largest operator of retirement villages in Australia, with 9400 units and a further 3000 under development.

Mr Shakesheff said with its one-child policy in place for about 35 years until recently, “China has an issue with an ageing population and retirement, and how to handle that. We wanted to get an understanding of how they operate, and of their sales process. Their model is quite different from ours.”

He said Stockland had “no near-term plans” to seek to operate in China or to link with a Chinese company in Australia. “But we have had a number of people knocking on our door.”