Chinese developer goes cold on Lendlease deal

"The economic challenges confronting both Australia and the world have forced all businesses to review their strategies and activities. For Poly Global, this process has involved focusing on our core strengths and ensuring the business is well placed to thrive when economic conditions improve," the company said.

"The company does not comment on potential projects but we are taking the responsible step of scrutinising all prospective investments and activities to ensure we retain our strong financial position."

A Lendlease spokesman declined to comment.

A big spender retreats

Poly entered the local market in 2015, buying properties around the country and gaining a reputation for paying big prices.

In February this year, the group paid $270 million for a 26-storey tower at 59 Goulburn Street in Sydney's CBD, a deal that wasn't halted by foreign investment restrictions or the spread of COVID-19.

Part of Poly's strategy of expanding in Australia is said to have been partnering with other investors to create managed investment trusts, which would potentially smooth the path for Foreign Investment Review Board approvals.

Approvals for Chinese companies buying Australian assets have slowed after the government decided every foreign acquisition must receive approval.

It coincides with a growing view that any China-led acquisition is being stalled or rejected, including China Mengniu Dairy Co's proposed $600 million acquisition of Lion Dairy & Drinks.

Poly has previously said it plans to build a development pipeline of up to 3000 apartments in NSW, as well as commercial buildings and retirement villages.

Poly's larger residential projects include a $344 million mixed-use development in the Sydney suburb of Epping with 501 apartments; a 500-apartment development of the Wentworthville mall site in Sydney's west; and a 516-apartment development at Bankstown's Spring Square.

While Poly Group is listed on the Shanghai stock exchange, it is considered to have close links to Beijing. One of its shareholders is the private and opaque China Poly Group Corporation, which also owns one of the world's largest arms dealers, Poly Technologies.

Property developers linked to China have changed tack quickly before under pressure or direction from Beijing.

In 2017, China's Wanda Group, under pressure from Beijing to crimp its offshore expansion and reduce debt, sold a majority stake in its two flagship Australian real estate projects.

The Hong Kong-listed Wanda Hotel Development initially denied a report in The Australian Financial Review that said it was considering offloading stakes, but days later said it would sell a 60 per cent interest in its Sydney and Gold Coast developments to a company controlled by the group's founder, Wang Jianlin.

The sale coincided with concerns from Beijing about "irrational" offshore investment that could pose a systemic risk to the Chinese banking system.