Some of the buyers said they hired lawyers before they bought the apartments and despite being warned not to buy them, they did. Others bought the units without legal advice.

Lawrence Xu, the chief executive of Hua Cheng, said in an interview in Mandarin 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. He said that after he ran into cost overruns he renegotiated funding from Super Vision but the funds arrived 5 months late, resulting in construction delay and slow settlement of apartments.

"They want to enter the housing market in Australia, but they don't really understand the rules and regulations or the way development works here," he said.

"The timing of the additional funding was critical to the development. They even sent people over here to observe the project. But they took months to approve the loan, there were so many layers.

"I made numerous trips to Beijing and Hong Kong and each time we agreed in principal, they changed their minds."

Mr Xu also said the numerous changes in staff at Super Vision meant there was no paper trail of the commitment to fund.

The Australian Financial Review tried to contact China Orient Asset Management Corporation but did not get a response.


To help pay 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 each to Chinese buyers paid for upfront. The normal sale price was $650,000 to $700,000 each, the sales agent appointed to sell the units at the time, World Square Property Group said. One of the directors at the agency also bought units.

The buyers said they were looking at the role of both the lender and the developer in this imbroglio.

"We want to chase these two parties for justice," one buyer said.

"Even if you are a foreign lender, you should have proper compliance and quality assurances to ensure delivery and performance.

"And the bank should have refused to lend to this developer so the project should never have taken off, and victimised people."

Another buyer said: "No one in Australia is controlling this. How do we buy a home in the future. How can we trust another developer?"

The private lending industry is about 6 per cent of the financial system, RBA said in its Financial Stability Review in April.

Interest rates vary depending on the risks of projects and have ranged from 33 per cent for short-term loans to standard rates of about 7 per cent for apartment loans to 20 per cent for development loans.

The receiver and liquidator declined to comment.