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The Guardian - AU
The Guardian - AU
National
Anne Davies

Top Chinese developer’s financial woes cast shadow over Australian property market

The Wilton Greens housing estate in Sydney's south-west
The Wilton Greens estate in Sydney's south-west is being built by a subsidiary of Country Garden, one of several developers based in China who have scaled back Australian plans recently. Photograph: Blake Sharp-Wiggins/The Guardian

The financial problems of one of China’s biggest property companies, Country Garden, could reverberate in the Australian property market, where its subsidiary Risland Australia is developing two massive housing estates on the fringes of Sydney and Melbourne.

Delays in the projects or a corporate failure would have significant impacts on the amount of new housing coming on to the market during a dire affordability crisis.

Country Garden Holdings Co’s bonds and shares plunged on Friday after the company failed to make payments on debt instruments it had issued. It now has a 30-day grace period before it is considered in default.

Late on Thursday, the company revealed the depth of its funding challenges by saying it expected to post a net loss of 45-55bn yuan ($11.7bn) for the first half of this year.

Risland’s main project in Sydney is Wilton Greens, a 4,500-lot estate 80km from the Sydney CBD. The first stage is almost sold out and the first houses are under construction.

On Monday, construction was continuing as normal.

A spokesperson for Risland said the company would continue development of the first and second stages.

“As indicated previously, there will be an expression of interest campaign for stages 3 to 6 of the project, totalling around 330 hectares or 2,380 lots of residential subdivision,” the spokesperson said. “This will allow Risland to rebalance its portfolio and continue to seek new opportunities to operate in the important Australian market.”

The company said all deposits from homeowners were held in a trust fund. Risland had already begun downsizing its Australian operations.

In July, the company put the undeveloped portion of its Windermere Estate at Mambourin, 38km from Melbourne, on the market with an asking price of $250m.

It was due to have 4,700 homes and 14,000 residents on completion, scheduled for 2030.

Risland joins a number of other Chinese developers who have pulled back from the Australian market in the past three years. These include Poly, Greenland, Yuhu and Dalian Wanda.

The NSW government has forecast 119,400 to 138,550 new homes will be built in greater Sydney over the next five years, so any pause on a major development such as Wilton Greens would be significant.

Comment has been sought from the NSW planning minister, Paul Scully.

Country Garden came to prominence in Australia in 2018 after the NSW Independent Commission Against Corruption began investigating the former NSW MP Daryl Maguire over allegations he sought kickbacks for assistance on property deals. One of the companies he said he was representing was Country Garden, which was seeking development sites in Sydney. Country Garden has said it did not pay Maguire any fees and did nothing wrong.

It subsequently changed its name in Australia to Risland, but remains a wholly owned subsidiary of Country Garden.

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