18 Oct 2008 8:14 PM:
Thanks for your post AEC, it is what I have been saying/thinking, but put more forcefully.Property development is ALL about managing cashflow,and Calidona have been able to do that so far because they purchased the land outright, and therefore were able to wait as long as necessary to begin building, i.e. until they had enough cash deposits to finance the Phase 1 and 2 construction costs in my opinion. I am not panicking ..yet.. Anita is right 9 months IS a long time, but I'm afraid that some people will be in a much worse position by then with unemployment due to rise to over 2mill in the UK .
I have bought 2 properties, and I notice a number of other people have as well. Good marketing MRI ! Corvera say they have "sold about 1600 out of 2400 properties, with 45% going to Spanish buyers. That means about 700 have been bought by "others". If half of those people bought 2 then about 450 people have a big decision to make here, not including the Spanish buyers.I agree that the number of final completions could be small indeed. Perhaps any shortfall could be made up by Phase 3 and 4 purchasers being offered Phase 1 and 2 unsold properties as a swap? This would be better all round as it would mean that there would be a bigger "nucleus" of residents from the beginning. The proximity of Murcia city and the airport I agree should be good for people trying to rent their "spare" apartments on long lets,but I agree with previous posters about the likelihood rental income won't cover outgoings.
The chances of getting your deposit back is ZERO, and is a very false hope to give people. This money has been spent. I think the facilities will eventually be built but I think we'll be lucky to get firm dates on anything but the Clubhouse as Corvera reps have indicated already.
As for the interest rate situation. I work in the London money markets.As I said a few months back the ECB WOULD be cutting rates by late Autumn, and they have done so in a co-ordinated action. This Friday the US banks started lending to each other after a heavy prompt from the Federal Reseve. LIBOR's over there will fall this week,by as much as 1%.This will drag UK and Euro LIBORS down too,probably not as much though. I think the BoE will cut rates in Nov by at LEAST 50basis points (1/2%) maybe as much as 1%... so that will help people on trackers and variable rates too.By Christmas LIBOR over Base rates will have fallen 1% as well I think.The ECB will cut rates again also, but they are really dragging their heels. As the poster from HBOS has said though, there isn't a lot of cash about for lending so deals will be on pretty harsh terms for at least 12-18 months in my view.
As for hoping Calidona go bust...I sincerely hope that doesn't happen. Everybody seems to talk a lot about their "guarantees.. any idea which bank is giving you those guarantees? I did look at the original one, but I can't remember the name, it was THAT memorable. I can guarantee you though that if that bank went bust then it wouldn't be worth the paper it's written on. Banks around the world have lost $400 billion on Lehmans because the "insurance" they bought (called credit default swaps CDS) hasn't been honoured. It's being paid out at 9c in the $ if you want numbers.
This may all sound gloomy....well there's no escaping that. I'm usually the most optimistic person in the room but I have never seen anything like we are going through now in almost 30 years in the City. It's all about SURVIVAL everywhere,corporate and individual.
Wait and see is I think the only option right now. The building is progressing, so Calidona are still paying the wages. We don't have to pay any more money until our decision next year. I am still expecting to complete on at least one of my properties and have decided to get the A/C installed in that.. that's MY commitment. ( I looked at the "joint" approach with some interest but decided that I wanted it done right, with recourse to the developer if it went wrong, and also that I'm not sure how many of the group might in the end actually complete.) Anybody else want to say how "commited" they are at this point in time ?????
Chris
Community thread:
thinking of walking away from it....things are going to get worse
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