Hurstville off the plan buys at risk after developer default
Around 14 buyers who bought apartments off the plan in a tower in Sydney's south-west at discounted prices are now facing the loss of their investment.
It comes after the developer defaulted on a loan from a British Virgin Island lender.
The home buyers, described by the Australian Financial Review as mostly Mandarin speakers, all with Chinese names, are considering legal action.
It comes after Hua Cheng International Holdings Group, the developer of the 100-unit Royal Plaza property in Woodville Street, Hurstville, defaulted on a loan to Chinese-backed Super Vision Resources.
In July, Super Vision appointed Ernst & Young and Hall Chadwick as receiver and liquidator.
They have now seized the 14 apartments that were purchased off the plan at a big discount, along with another 16 unsold apartments.
The property know as 2 Barratt St and 18-22 Woodville St, Hurstville.
When the 14 buyers paid for their discounted apartments in 2013, they paid for them in full, but did not received title.
Some of the buyers hired lawyers before they bought the apartments and were warned not to buy them.
Lawrence Xu, the chief executive of Hua Cheng, told the paper that he was unable to get development and construction finance from the big four local banks but found $35 million from British Virgin Islands registered Super Vision. They agreed on a interest rate of 15 per cent.
Super Vision is a subsidiary of the state-owned Chinese financial services firm, China Orient Asset Management Corporation, based in Beijing.
Mr Xu blamed the lender for the default, the AFR reported.
He ran into cost overruns and the funds that arrived five months late.
Paying down the loan to Super Vision, Hue Cheng said that in 2013 it sold 14 two-bedroom apartments at a discounted price of $450,000 to the 14 Chinese buyers who paid upfront.
The normal sale price was $650,000 to $700,000 each, World Square Property Group said.
The buyers said they were looking at the role of both the lender and the developer in this mess.
"We want to chase these two parties for justice," one buyer said.
Interest rates vary depending on the risks of projects from standard rates of about seven per cent for apartment loans up to 20 per cent for development loans.
The receiver and liquidator declined to comment.
