9 Danny Luu, Mortgage Broker, Pagoda Finance

The principal of Pagoda Finance is hopeful that the banks’ reluctance to lend to developers could ease in the coming year

Based in the Sydney CBD, Pagoda Finance specialises in Chinese developers from Australia’s Chinese community as well as from mainland China. With no shortage of ambition these developers are a powerful group, but accessing them takes language skills – Danny Luu speaks Cantonese – and many hours on a plane. The rewards for putting in that effort are huge deals: the average loan Luu writes is worth over $4m.

Luu provides funding to his clients, but he also plays an important role in development projects. “We try to help them with the services around them; put together a team for them,” says Luu. This team includes the right valuer, builder and quantity surveyor. “We help them with presales,” Luu adds. “We stress the fact that they’re not to sell overseas until they meet their local presales criteria.”

The brokerage charges limited fees when the bank pays commission, with more substantial fees in other cases. 

Changing bank appetites
The willingness of banks to lend has changed over the past year, Luu says, but “they’re always willing to lend to the right client”. Experience makes the difference: “The right client is not the client who’d be doing their first or second or third project; the right client could be the one who’s doing their sixth or seventh project.”

Looking elsewhere for finance
With connections to China, Luu is one of the best-positioned brokers to access offshore funders to fill the gap left by Australia’s majors. Luu is working with offshore funders, in addition to Australian lenders, but he is continuing to use the majors. “With a very strong client the majors will do it. More marginal you’ll have to look beyond the majors.” 

Outlook for 2017/18
Asked whether the coming year will see lending get even tighter, Luu is surprisingly positive, particularly for a Sydney-based broker. “Yes and no,” he explains. “It got really tough early this year, but I’m hearing rumours about the banks, [that] some of their existing projects are beginning to get paid down. That loosens things up a bit; you’ve got to be there at the right time to take advantage of that.” Yet even if the majors become more willing to lend to developers, the broker’s workload won’t get much lighter, Luu warns. “It’s always going to be hard with the big deals that we do.”

“The right client is not the client who’d be doing their first or second or third project; the right client could be the one who’s doing their sixth or seventh project”