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Local developers are turning to offshore groups in order to sell land earmarked for development, and they are making million-dollar profits.
The Australian Financial Review listed Sydney as one of the most popular hotspots for developers to on-sell their land to overseas buyers, as it is becoming harder to find vacant land close to the city’s CBD.
One private developer purchased a site in Sydney’s inner-city suburb of Redfern last year for $20 million, only to sell it to a Chinese developer for $43 million in May this year.
Another site in Burwood, located in Sydney’s inner west, was sold for $35.6 million in July after being snapped up four years ago by a developer for roughly $25 million.
Property consultant John Darmoudy told Fairfax Media that obtaining development approval ahead of sale would greatly benefit developers, since it would 'de-risk' their site and improve its sale value.
According to Fairfax, almost 50 per cent of apartments under construction in Australia are being built by offshore groups, highlighting just how competitive the residential development market has become.
Real Estate Business reported earlier this week the danger that unregulated developers from Asia could lead to an oversupply of cheaper apartments, particularly along the east coast of Australia.
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