From the AFR comes loony money:
Real estate financier Qualitas, backed by Carol and Alan Schwartz, has seeded a start-up that allows small investors to offer home loans to Asian buyers shunned by the major banks.
Peer Estate, founded by former Qualitas executive Adam Broder and ANZ banking tech expert Phil Aarons, and seeded with Qualitas funding, is an online marketplace where investors can provide as little as $5000 to fund a first mortgage for an overseas buyer.
“Property debt is an asset class everyone understands. However, historically in this country only the ultra-wealthy or institutions have had the ability to secure the outsized returns for relatively low risk from this asset class,” Mr Broder told told The Australian Financial Review.
Clearly not everyone understands it, most notably Mr Broder. A few of the risks include:
- the banks crimping lending even further as little patsies buy the risk;
- inevitable further tightening in the Chinese capital account and possible closure;
- policy risk in Australia as the groundswell against immigration (most obvious in the rise of One Nation) forces a big cut in the immigration intake;
- policy risk from APRA or ASIC which shut this down because they support the bank tightening;
- a property downturn here spooking Chinese investors (apartment prices are already falling in Brisbane and Melbourne);
- Chinese investors walking away from debts, properties and everything else owing to any of the above and/or in a global shock (as happened in the GFC).
The only person for whom this is low risk is the property developers that have funded it, presumably so that they too can sell out of their own high risk Chinese liabilities.
