Aoyuan Sells Aussie Stake as Chinese Exodus Rolls On

The list of Chinese developers exiting Australia keeps getting longer as the fallout from the liquidity squeeze on China’s property giants continues to be felt worldwide. 

Hong Kong-listed China Aoyuan Group is among the heavily indebted ranks. 

Struggling to raise capital it has joined other Chinese developers in a global fire sale of assets, including its latest disposal of a stake in its Australian operations. 

In a recently inked deal announced to the Hong Kong Stock Exchange it has sold a 49 per cent share of Aoyuan Property Group Australia to entities linked to the head of the local business, Adrian Liaw. 

The transaction is expected to be completed by the end of July enabling a debt restructure that will put more than $100 million back in the parent company’s coffers. 

In December, China Aoyuan Group said creditors had demanded repayment of about $1 billion due to a slew of credit-rating downgrades and warned it would not be able to pay due to a lack of liquidity. 

Aoyuan debuted in the Australian market in 2015 with the One30 Hyde Park development in Sydney and currently has more than 500 apartments in its pipeline, including its Mesa Hurstville and Woolooware Bay projects. 

It is one of several major Chinese developers under pressure due to regulatory curbs on borrowing that have resulted in offshore debt defaults, credit-rating downgrades and sell-offs. 

The impact of the new regulations on development company debt limits first put the crunch on China Evergrande Group, which had become one of the country’s biggest real estate developers by borrowing $300 billion. 

▲ A render of Aoyuan’s One-30 Hyde Park development.

It caused a ripple effect with other major Chinese groups such as Poly Global, R&F and Hengmao Group exiting the international market and pulling the plug on projects. 

In Australia, Poly has put multiple projects in Sydney and Melbourne on the block and R&F has abandoned a 10,000-home project in Springfield, west of Brisbane.  

In a statement, Aoyuan director Adrian Liaw said the sale of the 49 per cent stake in the Australian operations would enable the business to “forge ahead without being impacted by any liquidity issues currently faced by [the parent company]”. 

He said the new entity was in a strong equity position, enabling it to continue operations “business as usual” under the Aoyuan International banner but it “may rebrand in the future”. 

“We’re excited to be able to give our partners and buyers peace of mind with this news” he said. 

“They can be reassured that we have both the capacity and the commitment to completing our portfolio of projects to the high standard we’ve always promised.”

Editor's note: A previous version of this article said Aqualand was exiting the Australian market. This is incorrect.