Overseas investors who contracted in May 2008 to purchase a luxury off-the-plan Gold Coast condominium, but failed to settle, must pay the developer’s re-sale loss representing 30% of its value.
Hai Chang and Ge Wen Wu – from the Peoples’ Republic of China – signed up for the condo on level 12 of Hilton Surfers Paradise’s Orchid Tower at a price of $935,000
They paid a 10% deposit on signing, at a time when the full wrath of the GFC was yet to reveal itself.
When settlement was called for in September 2011 and then extended until October, the buyers failed turn up with a cheque.
Developer Brookfield Multiplex – who lender ANZ recruited to complete the project after the demise of its originator, Raptis group – terminated the contract on 1 November 2011 and forfeited the deposit.
The unit was resold in September 2012 at $675k, settling in December 2012. Brookfield sued for its loss.
The Southport District Court scheduled the case for “additional consideration” because of “the marked difference in the respective sale prices” but ultimately accepted that the re-sale was a bone fide arm’s length transaction and the $278k loss resulted from “a function of market forces in play between the respective dates of sale”.
Taking into account the $93k deposit already held, the court ordered the buyers – who were unrepresented at the hearing – to pay an additional $183k including commission and marketing expenses.
According to on-line commentator, Property Observer, “the Hilton development will go down in history as one of the worst loss-making Gold Coast high rises, with virtually every initial off-the-plan buyer losing their money”.
Some of the worst losses, it reports, were at the prestige end. Unit 2205 originally sold in June 2012 for $2.4 million. It then sold six months later for $1.7 million –a loss of $760k.
Even investors who bought as recently as 2012 also lost badly. For example, its website states, unit 3603 sold in June 2012 for $1.1 million, and sold four months later for a $121k loss.