Is Melbourne China’s new ghost city?

From Bloomie, Melbourne’s building boom just keeps on giving:

Greenland Holding Group Co., the builder of one of China’s tallest towers, plans to construct 1,000 apartments on a Melbourne site and expects to open a five-star, 180-room hotel in Sydney by 2015.

The state-owned developer is seeking to finalize the purchase of the land from the Victoria Racing Club by the end of 2013…

Greenland, which entered Australia this year to capitalize on rising home prices and growing demand from Chinese buyers, plans to turn the other building on the site into Sydney’s tallest residential tower. The push into Melbourne, following a 7 percent increase in apartment prices in the nation’s biggest cities this year, is part of Greenland’s plan to invest more than A$1 billion ($934 million) in Australia in two years.

…In Melbourne, Greenland entered into talks with the Victoria Racing Club last month on two parcels of land next to the Flemington Racecourse, home of the Melbourne Cup Carnival. The company will build a tower that includes some retail, Luo said.

Greenland joins Chinese developers, including Dalian Wanda Group and ABP (China) Holdings Group Ltd., which are moving overseas as the government steps up a three-year campaign to cool the housing market.

We’ve noted for several years how significant is Melbourne’s supply imbalance. The boom has been running for several years now:

With the following assessment by Bob Birrell and Co:

“Between 2010-2012, the inner-city skyline was transformed with the completion of 22,605 apartments. However, the city is set to see a further 39,000 additional completed apartments that have already commenced or have been released for off-the-plan sale.”

We know as well that much of this construction (all?) is aimed at the citizenship export sector, as well students. A quick glance at the vacancy rates around central Melbourne shows very high rates with Docklands, Melbourne and South Bank both above 7% and St Kilda Road at 17%.

Not that that is deterring prices nor more development while animal spirits run. And with a paucity of alternative idea for Melbourne industry, the Government is cheering it on. From Planning Minister Matthew Guy recently:

“Melbourne’s skyline will continue to dramatically change, compared to other cities . . . it will certainly consolidate its position as the tallest skyline in Australia,” Mr Guy told The Australian Financial Review.

“I view that with pride, because we are optimising our land use in our central city area. We’re not wasting our land . . . low-squat buildings in the CBD are wasteful”…

“We’ve approved a number of buildings over 200 metres and will continue to do so,” he said…

Party on! Developers almost never see the turn in the cycle when it comes. And with China’s now stymied SOE developers headed down under who can say when it will?