Recent success in the Gold Coast commercial market has made way for a new 'city' structure to be built, which could surge interest in commercial real estate around the region. Songcheng Performance Development, a Chinese company, is negotiating a $1 billion deal to acquire sugar cane lands between Brisbane and the Gold Coast that would be developed into a new sub-city over the next 25 years.
All aspects of the proposed major development have been planned, from schools, office buildings, medical centres and infrastructure (which will mostly link to existing road networks), according to an article from Real Commercial on March 6. A total of 6,117 hectares of land would be involved in the sale, and the current owners have formally agreed.
The new development would act as a tourist hub primarily, bridging the gap between the Brisbane and Gold Coast markets.
The current proposal from Songcheng Performance Development shows that interest from foreign markets is high for Australian land – two other Chinese buyers enquired about the deal, as well as one Middle Eastern party. It's great news for struggling cane farmers too, comments Canford Property Group Principal Roland Evans:
"If the sale goes ahead, it will be a financial saviour for the cane farmers – many of them are in a state of despair over the challenges they face in the sugar industry. They'll be debt-free and able to farm their land for the foreseeable future – until it's required by the buyer."
Until the plans are accepted by the Queensland government and local council, the sugar cane farmers will be allowed to continue farming, even after the sale. It's not expected to be a complete deal until the middle of 2018, after the Chinese group formalises its due diligence.
Songcheng Performance Development isn't the only overseas investment group looking at Queensland as a great place to venture into commercial projects. Sekisui House, listed in Japan, recently launched plans to start work on its $800 million mixed-use development in Brisbane's West End, as well as another $900 million project on the Sunshine Coast, according to a Real Commercial article from February 14.
Sekisui House is one of the world's largest residential builders, and is committed to working in Brisbane and south-east Queensland for the next decade at least.
"We have a robust view of the Queensland marketplace in the long-term," said Chief Executive and Managing Director Toru Abe.
"Sekisui House is making a significant investment in southeast Queensland, a region that we believe holds great potential."
Two major players in the Asian market are making serious moves to develop on the Gold Coast and in Brisbane – if you've been thinking about buying or renting on the Gold Coast recently, now might be the best time to act. As planned developments go up, there will be capital growth on all commercial properties in the region as they're seen as more and more valuable.
In what is so far the largest hotel sale of the year, the Hilton Melbourne South Wharf was sold to Singapore-based UOL Group, as stated in a report from CoreLogic RP Data on March 16. The most recent transaction of the hotel was in 2011, when a 75 per cent stake of the 99-year leasehold was sold for $137 million.
Just six years later, the whole development moves for almost $100 million more – similar capital gains could be experienced by owners of commercial property on the Gold Coast. For more information about the state of the market at present, or to discuss buying and selling commercial real estate, get in touch with Ray White Surfers Paradise today.