Chinese Eye Australian Farmland to Limit Exposure of Property Market

Posted: December 1, 2014 in Econ 101, Free Trade

SOURCE: http://www.theaustralian.com.au/business/property/chinese-eye-farmland-to-broaden-their-horizons/story-fnko7zi0-1227140083179?nk=3ca07b68ca7350c864781bacd5c9960b

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Chinese eye farmland to broaden their horizons

The Australian December 01, 2014

Sherwood Luo Managing Director of Greebland Holding Group pictured 115 Bathurst Street, Sydney. Which will be Sydney's talles...

Sherwood Luo says Greenland diversification has always been part of strategy. Picture: Renee Nowytarger Source: News Corp Australia

CHINESE property developers are charging into Australian agriculture in a bid to limit their exposure to the residential property market.

Chinese-backed property groups Greenland Holding Group, Country Garden, Harman Global, Evergrande Group and Hailiang Group are among the companies running the ruler over agricultural sites.

Greenland Australia managing director Sherwood Luo said Chinese companies had a wide spread of investments in their domestic market.

“Greenland itself is a diversified business. It is not only property development, but also in mining, finance and many other sectors. This has always been the company’s strategy,” Mr Luo said.

Greenland has invested $1.6 billion in Australian property projects — mostly residential — and the group this month announced that it aimed to become a player in beef, dairy and agriculture. The company is understood to be negotiating on major agricultural properties and aims to export products to the burgeoning Chinese middle class. Mr Luo said the free-trade agreement between Australia and China — which reduced most tariffs on agricultural products — would lead to more investment.

CBRE agribusiness regional director Danny Thomas said there had been a surge of inquiries for agricultural property from the Chinese mainland in the past six months.

Mr Thomas said Chinese development groups had experienced huge growth in the past two decades due to the nation’s urbanisation, which required the construction of a vast number of new apartments.

Now that the Chinese residential market was slowing, property developers were expanding into agriculture as it was viewed as a growth sector, Mr Thomas said.

“Agriculture is a very logical translation (for Chinese development companies),” he said. “They see it as a natural area of growth for them to capitalise on the emerging middle class in their country. They have massive market power because of the strong growth they’ve experienced over the past decade and they are now able to leverage that into an area that they see as having very strong growth fundamentals for the next decade.”

Mr Thomas said poultry assets would not be popular with the Chinese as the produce was readily available in China.

“But if its something expensive like beef or dairy, they will be ­focused very much on those ­assets,” he said.

Ethan He, chief executive of Chinese-backed residential developer Harman Global, said the group aimed to enter the local agricultural market. “We are considering it because Australian agriculture is a great opportunity for Chinese companies; we want to divert the risk (of too much exposure to the residential market),” Mr He said.

“A lot of Chinese businessmen are looking to get into Australian agriculture and we think it would lead to more investment (into our company).”

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