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Chinese Property Investors Migrate Towards Non-Banks

chinese businesswomanAn article on Your Investment Property talks about Chinese real estate investors turning to non-bank lending institutions for loans, a migration that can be put down to the unwillingness of banking institutions when it comes to lending money.

Chinese investors drawn towards non-banking lenders

Already, the non-banking lenders have displayed a growth of 86% in the commercial property sector and we are only talking about the second half of the year which is just half way through. The article takes the case of Chifley Securities, a non-bank lender to drive home the point. The company lent $35 million till 30 June and in the second half of the year, it has already lent $65 million to Chinese property investors.

Banks not willing to lend

There are several offshore investors who are really good with ideas and have the financial muscle to execute them but are facing a solid wall due to the obstinacy of the banks. These investors have been given a second chance by non-banking institutions and the relationship is turning out to be mutually beneficial, says the article.

Foreign investment in the property market has been a grave concern in the recent past and the matter has been brought to the notice of the parliament, too.

You can read the original article here.

It’s a two-edged sword

In my opinion, this is a very tricky situation. On one hand, foreign investments in our property can mean further growth of the property market and recognition in the eye of the global community. On the other, this can raise questions of affordability in certain pockets of real estate and clearly elbow out the first home buyers from the race (as an aside, it is really heartening to find out that FHBs are turning into investors at a never-before seen rate).

Potential for money laundering

I also feel that overseas buyers can involve themselves in high volume money laundering with local enterprises as front companies. Thorough investigations and rigorous penalties have been called for by the regulators. This all good, but why put a fee regime at all and encourage big players just to suck in a few extra million into the government coffers?