Dumb money chases Chinese apartment buyer rescue

Wednesday 12 October 2016

Behind the scenes an incredible drama is taking place in the Australian apartment market as a wide variety of people and organisations try to avoid a meltdown.

…A group is looking to form a consortium of lenders comprising major Melbourne families and various small institutions to help them. The problem is that with so many opportunities available the rates that will be charged will be between 10 and 15 per cent. In this case the developer is a major public company with a strong balance sheet. When the settlements are due and not paid they will almost certainly simply defer them and their balance sheet can stand the pain. Shareholders will have to be told either in February or in August, 2017, depending on when the settlements are due.

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About the author

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific's leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.