Foreign property developer JSK Property has said the slowdown caused by tighter foreign lending restrictions is only temporary, reports the Australian Financial Review
Sean Wong, the Australian head of JSK told the paper that current trends – which are driven by measures to cut off lending to foreign buyers or that require foreign developers to provide up to 55% equity – will be over within 18 months.
“We predict it will be for a year – a year and a half at max – then they will start stimulating the market again,” Wong said. “For it to go on two years, the market will crash. It’s not healthy for the market.”
The tighter restrictions have affected JSK, reports the Australian Financial Review
, forcing the firm to find additional capital to fund the Union Tower project. On commencement of discussions two years ago, the banks were willing to fund 60% of the project’s total $47 million value. However, last year when JSK had finalised the lending agreement, Westpac said it would only cover 45% of the cost.
As JSK has projects in Malaysia, China and the UK, it could come up with the additional equity required. However, other developers may not be able to start new projects under similar conditions, said Johnny Wong, managing director of JSK.
Since Australia has to remain competitive, tighter foreign credit restrictions can not remain in place for long, he added.
“This is good for the short term. It’s a consolidation of the market. But, of course, this has to be a short-term measure. [Otherwise] the foreign buyers will look at this country as not being welcome any more. They will move their investment to other places.”
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