Coreile

Chinese Domain Market Newsletter

I miss both the dragon city and the ginkgo city for their variety of restaurants. They offer a lot of choices for breakfast. Here in the sail city, I have very limited choices -- and they are much more expensive. So, often we end up eating at MacDonald, and my order is always the big breakfast. Well, I should be thankful that at least we live in a beautiful city. Here's the post.

June 18, 2016 (Sat)

What if you can borrow to invest in domain names


China may be showing us a new trend: borrow to invest in domain names. In the west, domain investmnet is about using you own cash to buy domain names. Yes, there have been companies such as DigiPawn.com (no longer in service) and intelend.com offering domain financing, but they are not very visible to investors and their lending rates are not clear. China is showing us a different way of domain financing.

In my Feb 18 blog post, I wrote about Dai.top offering domain loans to investors. Now, this practice was widely publicized at a recent domain conference in China. If you visit the website of the Global Domain Summit held early this month in China, you'll see a page which lists seven lenders offering financing to investors so that they could purchase domain names at the conference. These lenders are WRZ.com, RZ.com, YM.com, ZT.com, Mingyou.com, Jiandai.com, and dai.top.

The same page also lists domain names that qualify, their expected maximum auction prices, and the maximum amount that can be borrowed on the names. In real estate investment, we use the loan-to-value (LTV) ratio to indicate how much we can borrow against a property. Here, I'll use the auction prices as proxies to the values of domain names, so that we can apply the same concept to domain names. The following table gives you an idea of the LTV of some domain names that I calculated.

NameMax. LoanLTV
Banana.com10m CNY54%
HG.com10m67%
06.com5m83%
28.cn2.5m83%
gg.cn1.5m75%
cq.cc0.4m67%
70.net0.3m60%
e.vip0.2m67%

Surprisingly, the LTV ratios are quite high -- as much as 83% in two cases -- and the loan amount can exceed 1m USD. This shows Chinese lenders are very comfortable with the values of domain names. This will help many Chinese investors to buy and sell domain names.

Five types of domain extensions qualify: com, cn, net, cc, and vip. It's interesting to note that even ccTLD (.cc) and new gTLD (.vip) qualify, giving a lot of credibility to these two extensions. They would likely not be able to get any loan in western countreis.

I'll like to continue watching this trend to see if it will become widely popular in due time. Meanwhile, if you are interested in seeing the details, please viist the page at http://www.zg.com/index.php?m=content&c=index&a=show&catid=9&id=599.