Marbella, Spain, April 27, 2009 --(PR.com
)-- MRI assists clients in distress.
The changes in the world economic market-place have had many varied effects, and many different consequences. One of the most notable is for people who bought property in the emerging real estate markets of the world just prior to the global downturn. Some countries, such as Spain, Portugal, France, Bulgaria and the United States, are in a position to just ride out the storm knowing that demand will return to these areas as soon the market starts to recover. But where does that leave clients who bought in the emerging markets where the infrastructure was planned for the coming few years, but is not actually in place? Places like Romania, Cape Verde, Morocco and a host of other such destinations.
“We knew it was a high risk strategy buying in an emerging market” conceded Matthew Edwards from London who invested in a 2 bedroom apartment in a complex in Cape Verde, “but we did not expect the downturn to come so quick, or to be so severe. At the time we bought in mid 2007, the market was buoyant and even though Cape Verde was fairly basic in terms of facilities, we expected it would take around 3 to 5 years to bring the infrastructure up to a standard to make it a world-class holiday destination. With what’s happened to the global economy, we know it will now take much longer, and may never happen”.
“The world market is a very different place to what it was 2 years ago. It’s bad enough if one or two developers are struggling to complete the projects they promised, but when it comes to whole areas, and even countries suffering a huge economic setback, clients are running a real risk of being left with properties that are worth only a fraction of what they paid, and furthermore have very little prospect of rentals due to the lack of facilities, or regular flights, or decent roads.”
Only a couple of years ago, Romania was quoted by Channel Four in the UK as being the best place on earth to invest in, with potential returns in excess of 400% over 10 years. Clearly this is now highly unlikely to be achieved. In fact, some real estate investments in Romania may be lucky to reach parity with their 2007 values in ten years time.
Furthermore, many developers around the world are going bust. Many are hanging on by their finger-tips and are down-grading the development so that it does not now contain the facilities that clients originally expected. Legal cases in these countries are fraught with difficulties and rarely end up successful from the purchasers perspective. More often than not, clients throw good money after bad retaining lawyers to pursue developers in far off nations, and the result is no funds ever get paid back.
That means clients are having to face the possibility of losing large sums of money, or otherwise, they must look for alternative ways to recoup the loss that they have incurred.
“We are in a fortunate position at MRI in that we are a developer as well as being a Real Estate Agent” stated Pickering, the CEO. “That means, that in a few cases, we have been able to give our clients the opportunity to switch their investment into one of our own developments, particularly if the original developer in the emerging market has failed to live up to the terms of the contract such as not completing the full on-site facilities, or being late with the development.”
Pickering went on to say “It has been very well received, as we have helped clients to avoid losing 30, 40 or 50,000 euros. The real problem has been that we do not have enough properties to satisfy all the clients that would like to switch away from an emerging nation, and into one of our blue-chip regions. It’s a simple case of supply and demand, and sadly, far more people would like to move than we have properties available.”
Matthew Edwards from London was one of the lucky ones. “We managed to get out of Cape Verde and into Portugal with MRI recognizing most of the deposit we had lost in the bad investment in Cape Verde. You never know what the future holds, but I feel much more confident that Portugal will recover much faster than Cape Verde. That means that I stand a much better chance of making money out of my investment, and getting many more rentals. I feel a bit sorry for those who are left in Cape Verde, but at a time like this, I have to think for myself, and protect my own families position.”
It’s a sentiment that we can all relate to.