MARCH 2011 |
www.opp.org.uk
NEWS Fractional scandal in Africa By Amit Katwala
A dispute in South Africa is threatening the country’s fractional industry. Last month, investors discovered that the properties they bought from Seeff Properties / Golf and Leisure Joint Ownership are “mired in debt”, according to reports from
Realestateweb.co.za. According to the website, investors
bought shares under fractional title on the understanding they would have debt free properties, but it is alleged that share purchase money was not used to pay off debts, leaving investors owing R31m. This is having a detrimental effect on
the reputation of fractional developments in South Africa. A report from Business Day says it has raised serious legal questions, with a leading attorney saying that fractional ownership is “nothing more than glorifi ed time share”. The appointed auditor Mark Jaftha
said: “There are no management accounts. We could have 16000 loan accounts to reconcile over a four year period as every villa could potentially have a loan with every other villa.” Around 400 investors bought 35
villas in the Zimbali development, with each villa owned by a different holding company – those who wanted fractional titles bought shares in this company. Henry Greyling is the founder of
Golf and Leisure, which marketed fractional properties to investors under the Seeff brand. He has offered R15m (£1.28m) in compensation to investors in properties he sold under the Seeff brand.
Fractional feud | Investors in Zimbali liable for debts, but there are divided views
According to
Realestateweb.co.za, Greyling has called for Samuel Seeff to offer some money in compensation as well. However, Seeff denies liability for the debt, since he and his partner Stuart Manning ceased to work with Greyling in 2007, selling their shares to him. Greyling said: “I don’t think there
was any theft. If anything happened on my watch, I will stand father to it. I have R20m of unsold stock. Then there are debtors of R13m. Those real assets leave R25m in question. I personally am prepared to put in R15m. That leaves R10m. My challenge to Samuel Seeff is to pick up the R10m. After all, he sold shares in the company for R6.3m and received licence fees afterwards of at least R2.5m. “If the chartered accountant they have appointed says there were irregularities since inception and they received money, I would say they are accountable.” A spokesperson for Seeff properties told OPP that they were holding off on
comment until a full investigation had been conducted and they were in a better position to advise shareholders. An investigation has also been
launched by the Estate Agency Affairs board, at the request of South African Minister of Trade and Industry Rob Davies, who says there is to be a crackdown to “rid the industry of bad apples.” Dirk Wilson, managing director of Fractional Advertising Ltd in South Africa told OPP that tighter regulation may not help He said: “If you look at the ‘allegations’ particular to this case, one would assume that the problems are relating to either intentional or non- intentional mis-management, therefore even if the industry was more tightly regulated the same situation may have occurred. I do believe there should be more guidance for new entrants into the market, so these developers can structure their products in-line with various legislative guidelines, therefore limiting the risk of collapse and wrong doing.”
PIGS create a two-speed Europe
THE threat of further economic troubles in countries such as Italy, Portgual and Spain will hamper recovery of the European property market, according to report last month from PricewaterhouseCoopers and the Urban Land Institute. London, Munich, Paris and Istanbul
are set to be investment hotspots, but a combination of new regulation, European austerity, the debt crisis and a weak lending market pose challenges for other cities, says the report.
“Winning cities,” such as London and Paris, will continue to attract property investment and a “two-speed Europe” will emerge in its property market it concludes. “London and Paris are big, transparent markets. You can be sure you will find opportunities there,” says PwC partner John Forbes, one of the authors. Istanbul, adds the report, is appealing because of its relatively young population, while Munich offers stability. By contrast, crisis-hit cities
such as Dublin, Lisbon and Athens will only attract high-risk investors looking for bargains. Portugal, Italy, Greece and Spain have been dubbed the PIGS by economists.
INDUSTRY | 11
NEWS IN BRIEF Pyramid project for Berlin
HIGH quality global developer yoo launched its fi rst project in Berlin this month, a 10-storey pyramid-shaped glass and steel building designed by German architect Eike Becker. Due for completion in 2013, the scheme is a joint venture between Peach Property Group AG and yoo. Prices range from €270,320 to €2,890,000 and international sales are being handled by Cluttons. 20% of the development has already been sold.
Look London long-term
PRIME London property prices have an excellent long-term outlook. Values will rise in 2011 … as well as for the next fi ve years, predicts international property agency Cluttons. “The current critical shortage of property and continued strong demand are expected to drive prices in central London up by 2.5% over the coming year, which is broadly in line with growth in 2010,” says the company.
Gibraltar sales rocking OVERSEAS property sales in Gibraltar have made a strong start to 2011. Seven units were sold in Gibraltar’s Ocean Village marina development “within the fi rst week to a waiting list of buyers,” says the company, “and a further three properties priced between £280,000 and £470,000 have also been snapped up.”
A new low for Cyprus RESIDENTIAL property sales in Cyprus fell to a 2-year low in January 2011 according to the latest statistics from the island’s Land Registry. The volume of sale contracts deposited at Land Registries during January was 522, down 9% year-on-year. Sales volumes were down in Larnaca by -21%, in Limassol by -12%, in Paphos by -11%, and in Famagusta by -9%. Things were up by 3% in Nicosia.
30% increase in sales Swine fl u | PIGS under the weather
Move with Us reported a 27% y-o-y increase in house sales in January, and a rise in web traffi c. This was up 40% from December and 16% from November. Director Robin King said: “It’s terrifi c to to report an encouraging start to 2011 with an increase of almost 30% from this period last year.”
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