Aussie apartment developers facing the squeeze from Chinese companies are set to move into the Auckland market

Australian apartment developers are taking an increasing interest in the Auckland market as they find it difficult to compete against huge Chinese companies on their home turf.

Bruce Whillans  of commercial real estate agency Ray White Commercial Auckland, said there was growing interest in the Auckland apartment market from Australian developers, who viewed Auckland as a more attractive development proposition than Sydney or Melbourne.

"We've had two quite substantial groups out of Melbourne approach us in the last month and their situation is that they've been very active in the Melbourne apartment market and they had been looking to move into Sydney," Whillans said.

"But they've found that both Sydney and Melbourne are now awash with this new wave of Chinese developers that are paying top end prices, if not above market prices for land and they are just being pushed out and are missing out on opportunities.

"There's been constant commentary about the strength of the Auckland housing market which has been getting across to the other side of the Tasman, so they are looking to Auckland as an alternative to grow their business. They see it as a space they'd like to try."

"The difference between the Australian development market and the New Zealand development market is that most of the Australian developers have serious balance sheets," he said.

However Whillans also expected to see a pick up in development activity from Chinese investors in this country, however it may not be from the same Chinese companies that are active in the Australian market.

"I think the wave of Chinese investors we've seen in New Zealand to date have mainly been high net worth individuals looking to diversify out of their region," he said.

"The liberalisation of some Chinese monetary policies means some have decided to move money out of China and park it down here.

"They understand land and many of them have just been buying land to land bank," he said.

However some of them were also developers and he was aware of two major residential developments in Auckland, at New Lynn and Albany, that were being undertaken by private Chinese developers.

Whillans said most of the Chinese developers active in Australia were huge, multinational companies like Shanghai-based Greenland Group, which is currently developing what will be Australia's tallest residential building, the Greenland Centre in downtown Sydney.

"Companies like Greenland Group, which is one of the largest developers from China who are now taking Melbourne and Sydney by storm, it's companies like that that the local Australian developers are finding it hard to compete against," he said.

Whillans said Greenland Group had sent a delegation of executives to this country about two months ago to look at the Auckland market, but he did not think the big Chinese companies would be in a hurry to come here.

"I think the bigger Chinese developers just look at the population of Australia and the size of its cities, and I'm not sure whether Auckland is big enough for them," he said.

"I think we are probably going to see a group of developers come here but I'm not sure it's going to be the big corporates."

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*Bruce Whillans founded Whillans Realty Group five years ago and the company has traded as Ray White Commercial Auckland since then. However the Ray White franchise expires on July 1 and Whillans said he had decided not to renew it.

He said although the arrangement had been a happy one, Ray White was primarily known as a residential agency. "We found it difficult to come out from under the residential shadow,"  he said.

The agency will operate as Whillans Realty Group from next month.