12 | INDUSTRY DEVELOPER NEWS
LEGAL ACTION
www.opp.org.uk | APRIL 2010
Developers risk reputations to sue buyers
A number of UK developers are risking damage to their reputations by taking legal action against defaulting buyers. Companies including Berkeley
Homes, Telford Homes and Ballymore have filed hundreds of claims over the last few months against buyers attempting to break their contracts. The buyers have tried to pull out of the deals after their properties declined in value or they were refused large enough mortgages to cover the original price. One company has been awarded
damages of over £130,000 by a court that ruled against a buy-to-let investor trying to renege on his contract.
PR problems
Despite the financial imperative of such action, it may have broader consequences at a time when developers are trying to restore consumer confidence, both in the industry and off-plan.
EGYPT
Egypt’s $2bn resort launches European tour
A $2 billion resort town has partnered with the Egyptian Tourist Authority for series of exhibitions and roadshows across Europe. Kuwait-based developer MA Kharafi
Group is launching Port Ghalib in Europe over the next few months, having begun its Middle Eastern promotion last year. It hopes to target buyers from the
“It depends on the details of each
case but... the public is very much more informed than it used to be thanks to the internet and disaffected groups can organise very quickly, so any company should be aware of that before taking action,” said Fiona Brandhorst, property director for PR firm Wriglesworth. In the case of Berkeley Homes, an
action group – the Berkeley Homes Collective – has sprung up to advocate the position of affected buyers and reports have appeared in several major newspapers and on TV and radio. The Collective claims Berkeley have dismissed their suggestions for an alternative solution.
Last resort
However, the company, which says the legal action is a last resort following attempts at renegotiation, is confident that its image will be maintained and hasn’t initiated an active PR campaign to promote its side of the story.
UK, Germany, Italy, France, Russia and CIS countries. The resort will be set on over eight
million sqm of shoreline along Egypt’s Red Sea Riviera and include nine residential villages and 160 retail and commercial outlets, as well as a 1000- berth marina that is already operating. IMEX Frankfurt is the next destination
on the tour, having visited ITB Berlin, MITT Moscow and GIBTM Abu Dhabi last month. The developer also plans to visit events in London, Milan, Paris and Cannes and, in the second half of the year, intends to run its own roadshow events across Europe. The company has begun building an
agent network and plans to use these connections to send personal invitations
On the road | Egypt’s Port Ghalib is planning roadshow events across Europe
to potential buyers to advertise its events. It also plans to market the resort through print and TV advertising. Peter Riddoch (pictured), CEO of Port
Ghalib and formerly of UAE developer Damac, said that the buyer markets were identified using tourism statistics for the
region. “Whilst Egypt generally saw a drop of around 2% in tourist arrivals in 2009, Marsa Alam [airport, which adjoins Port Ghalib,] saw an increase of around 15%. 2010 has started strongly with 43% growth in January and February over the same period in 2009.”
Building trouble | Developers’ legal actions have attracted negative press attention
“Some of the articles that appear
online have comments that show a consensus that the buyers’ took the risk when they signed the contract and I do think most people in the street will realise this is the situation,” said Paul Vallone, managing director of Berkeley. “It does create negative PR
alongside the Berkeley name but most people recognise that we didn’t build our reputation by being sly or untrustworthy. If one group wants to publicise their plight that’s their prerogative but, in the long-term, the market is such that it will recover.”
HILLCREST’S THAI LAUNCH
Hong-Kong based developer Hillcrest Capital has
launched its Conrad Hotels & Resorts-branded residences in Koh Samui, Thailand. International consultancy CB Richard Ellis Thailand has been appointed sole sales agent for the 32 luxury villa project, which is designed by Singapore-based architects Eco.ID and is due to open later this year.
ESTONIA STARTS BUILDING
Developers in Estonia have started building
residential projects again as construction prices are low and the Tallinn property market appears to have stabilised, according to Swedbank Estonia. However, sales and confidence among local buyers remain low and the country is still suffering from a high level of unemployment.
OMAN’S$1BN RESORT
Oman developer Omnivest is planning to build a $1
billion tourism resort in the country’s southern port city of Salalah, including four hotels and housing units for sale to foreign and domestic buyers. Construction is expected to begin in late 2010 or early 2011 and will take place in three phases, the company’s chairman, Hani Al Zubair, told Reuters.
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