More signals have emerged suggesting that we are nearing the top of the apartment cycle.
A few weeks ago, it was the news that private lenders, such as self-managed super funds and private pooled investment funds, have begun taking over lending from the major banks, often at high interest rates.
Today, it has been reported that a Sydney-based ‘vulture fund’, named Realty Base Group, has been established to soak-up apartments that foreign-based buyers are unable to settle. From The AFR:
The fund, which will start at $30 million, will mimic the strategy deployed by US private equity firm Blackstone Group’s strategy just after the 2007 sub-prime crisis which saw the group buy up heavily discounted rental apartments for rental.
Chinese-backed Realty Base said it would raise funds from high net-worth Asian families and planned to achieve a minimum 10 per cent annual return for the fund over a three to five-year period.
“Based on our big data and modelling of off-the-plan market, we can see the risk of settlement will continue to increase in Melbourne and Brisbane,” said Realty Base Group director Ted He…
“We even forecast lots of developers will get financial distress and even go to liquidation. Our buyout fund may be the last chance for them but our fund will only be able to help a small number of them.”
Earth to Realty Base Group. Blackstone bought realty after the crash.
