An Australian non-bank lender says over a third of its loans are to Chinese borrowers for property development projects.
While recent reports suggest that Chinese demand for Australian property may be cooling, Chinese property investors now make up 37 per cent of lending provided by non-bank finance group Chifley Securities.
The proportion of loans to Chinese borrowers on Chifley’s applications, worth over $400 million over the last year, has risen from 25 per cent over the last six months, notwithstanding the Chinese government has created more obstacles in moving capital out of the country, the group said in a statement.
Over the last year, Chifley Securities has arranged $150 million worth of deals to Chinese borrowers, who are mostly financing development projects ranging from residential developments to high-end commercial properties.
Chifley Securities’ director Joe Morello said the loans to the Chinese borrowers have allowed them to finance projects while they undertake the sometimes lengthy process of freeing up offshore funds or undertake projects that do not fit the major banks’ now very tight lending criteria.
“This year depreciation of the Australian dollar and historic low interest rates has encouraged Chinese investors to come here and invest in commercial projects – ranging from commercial investments to development projects.
“We expect this trend to continue over the 2016, especially as the major banks have restricted their commercial property funding or made their lending criteria much tighter,” he said.
Chifley Securities has created partnerships with 2,000 brokers with a lending pool of $700 million. The non-bank funds projects ranging from $1 million to $50 million.
Mr Morello said Chifley Securities is filling a niche in the market for Chinese borrowers by basing its lending decisions on the existing asset values, risk profile and prospects on individual commercial property projects.