The Urban Developer
AdvertiseEventsWebinars
Urbanity
Awards
Sign In
Membership
Latest
Menu
Location
Sector
Category
Content
Type
Newsletters
Untitled design (8)
2 WEEKS UNTIL OUR UNMISSABLE FLAGSHIP CONFERENCE MORE THAN 550 ALREADY ATTENDING
2 WEEKS UNTIL OUR FLAGSHIP CONFERENCE 550+ ALREADY ATTENDING
REGISTER NOWDETAILS
TheUrbanDeveloper
Follow
About
About Us
Membership
Awards
Events
Webinars
Listings
Resources
Terms & Conditions
Commenting Policy
Privacy Policy
Republishing Guidelines
Editorial Charter
Complaints Handling Policy
Contact
General Enquiries
Advertise
Contribution Enquiry
Project Submission
Membership Enquiry
Newsletter
Stay up to date and with the latest news, projects, deals and features.
Subscribe
OtherStaff WriterSun 26 Mar 17

Storm Clouds or Blue Skies: Are The Chinese Really Abandoning Australian Real Estate?

TUD+ MEMBER CONTENT
china

Eighty percent is a number that catches people’s attention.  Especially when you’re talking about potential default rate. 

That was the claim made last week by Li Ming, co-director of real estate company Aussiehome, in an interview with The Australian on Chinese settlements on off-the-plan properties.  “The off-the-plan apartments market is now the worst I have seen in the last 10 years.”

Ming’s comments reflect the growing challenges faced by Chinese buyers wanting to invest in Australian OTP properties, both in terms of obtaining residential property mortgages and getting cash out of China.

The troubles started in 2015 when, in response to the concerns of Australian bank regulators, starting most Australian banks stopped giving mortgages to offshore buyers.  This credit drought has only gotten worse as the number of overseas buyers with OTP properties to settle has grown.

Adding to these woes, the Chinese government has moved to restrict capital outflows from China, effectively preventing Chinese investors from either paying cash or using loans sourced in China to pay for their Australian real estate purchases.  Things came to a head on New Years Eve, when the Chinese government sent a letter to all domestic banks suggesting they needed to more carefully check the documentation of overseas transfers.  Despite the letter's innocuous wording, the effect was immediate: overnight, Chinese banks throttled outbound money transfers from a torrent to a trickle.

Chinese investors have been left crambling.  And Aussie developers have noticed.

“The Chinese thing is stressing people out,” CT Johnson of China consultancy Cross Border Management told The Urban Developer.  “It’s slowing down Chinese presales, which used to be a gimme for lots of developers.  On the other end of the process, even though default rates haven’t gone up, developers are definitely nervous about settlement, wondering where their Chinese buyers will get funds.”

Is it really that bad?  Are Chinese investors finally abandoning the Australian real estate market?“No way,” said Matthew Royal of Development Financing Partners.  “The Chinese love Aussie property, and money will always find its way to good projects.  But people ARE paying more attention to financing, both on the development side and in terms of the final buyer.”

Andrew Gannon, CEO of Homeloan Corp, agrees.  “We know Chinese buyers are having trouble getting money out of China, so finding lending solutions in Australia is more critical than ever.  But there’s continuing strong demand which shows no signs of abating, and there are solutions available for most Chinese investors.”

Australian developers are adapting in a number of ways, including paying more attention to domestic presales, forming relationships with lenders offering mortgages to overseas buyers, and tapping into extra capital when necessary.  A number of developers have begun taking loans collateralised by completed units and then offering buyers extended settlement times for a fee.  This “vendor financing” approach appears to be gaining traction with both developers and buyers.

So is it storm clouds or blue skies for Aussie developers selling to Chinese buyers?“This is hiccup,” Johnson concluded.  “This always happens when there are changes in the market.  Things are tense at first and then people find new solutions.  That’s whats happening here.  The market adjusts.  When it comes to Australian property, the Chinese are here to stay.”

 
Exclusive Offer for The Urban Developer Readers


To register for up to a 30% discount click the image below, use "TUD" as an exclusive promotional code.


 

OtherResidentialAustraliaOther
AUTHOR
Staff Writer
"TheUrbanDeveloper.com is committed to delivering the latest news, reviews, opinions and insights into the best of urban development from Australia and around the world. "
More articles by this author
ADVERTISEMENT
Residential

Home Affordability Gap Widens Across Asia-Pacific

Lindsay Saunders
The Port of Brisbane has released its Vision 2060 which details the need for inland rail connectivity
Infrastructure

Brisbane Port’s $15bn Future Faces One Big Obstacle

Renee McKeown
Logan Wastewater Funding hero
Infrastructure

Flush of Funding to Deliver 20,000 New SEQ Homes

Phil Bartsch
Without the $135.98-million injection it is claimed the Logan City Council would have had to stop approving new housing …
LATEST
Residential

Home Affordability Gap Widens Across Asia-Pacific

Lindsay Saunders
3 Min
The Port of Brisbane has released its Vision 2060 which details the need for inland rail connectivity
Infrastructure

Brisbane Port’s $15bn Future Faces One Big Obstacle

Renee McKeown
5 Min
Logan Wastewater Funding hero
Infrastructure

Flush of Funding to Deliver 20,000 New SEQ Homes

Phil Bartsch
3 Min
Stockland's Triniti HERO
Build-to-Rent

Stockland $400m North Ryde BtR Approved on Appeal

Leon Della Bosca
3 Min
View All >
ADVERTISEMENT
Article originally posted at: https://theurbandeveloper.com/articles/storm-clouds-blue-skies-chinese-really-abandoning-australian-real-estate
SHARE
print
Print
TOP STORIES
The Port of Brisbane has released its Vision 2060 which details the need for inland rail connectivity
Infrastructure

Brisbane Port’s $15bn Future Faces One Big Obstacle

Renee McKeown
5 Min
Freecity Rouse Hill triple towers 2 Tempus Street
Exclusive

Freecity Takes Covers Off $330m Triple Towers in Sydney’s North-West

Leon Della Bosca
5 Min
Parallel Workshops Stockdale Housing PBSA project
Exclusive

Suburban Success Story Turns PBSA Thinking on its Head

Leon Della Bosca
7 Min
Exclusive

Interstate Developers Find Lots to Love in ‘Progressive, Affordable’ SA

Taryn Paris
5 Min
Bates Smart Richmond Sportslink HERO
Exclusive

BtR Focus Drives Bates Smart’s Richmond Sportslink Concept

Leon Della Bosca
6 Min
View All >