Staff reporterDecember 7, 2020
Apartment settlements to Chinese off-the-plan buyers are holding up in the Melbourne CBD, according to the construction financier MaxCap.
The off-the-plan sales in the north-western Elizabeth Street precinct showed little sign of settlement difficulties, said MaxCap chief investment officer Brae Sokolski.
He cited figures for four projects which were almost fully pre-sold.
He noted 65 per cent of apartments settled within the first two weeks of settlements, with the remainder of stock settling over four to six weeks with minimal evidence of default.
At least half of the buyers were foreigners who required Foreign Investment Review Board approval to buy.
"In the most trying environment for settlements, they are still proving incredibly resilient," Sokolski told Fairfax Media.
"The buyers from offshore are finding a way to ensure that they settle and they have investment in Australian real estate."
He suggested these buyers were the ones with notionally the highest possible risk.
"They bought when the market was very different in terms of their ability to access equity from China or debt from Australia.
"The fact that they are settling when they were caught unawares augers very well for the future of the industry and the settlements moving forward."
The four projects were Golden Age's Victoria One (160 stage-one units out of a planned total 643 apartments), Hengyi's Light House (627 apartments), ICD Property's EQ Tower (633 apartments) and Mammoth Empire's Empire Melbourne (487 apartments).
At Light House, 98 per cent of all apartments had settled successfully within 60 days of calling for settlements, Sokolski said. They took place in July this year.
Sokolski said a random sample review of title searches showed that about 58 per cent of the apartments purchased across the four projects were funded by cash, while 33 per cent was through major Australian banks or lenders, and a further 9 per cent through alternate or overseas lenders.
