THE challenging Mandurah apartment market continues to produce fallout, with developers in the region still struggling to reach settlement with some investors.
THE challenging Mandurah apartment market continues to produce fallout, with developers in the region still struggling to reach settlement with some investors.
The latest example has emerged at Western Australian property and construction group Pindan’s Aqueous apartment project on the Peel Inlet, where six of the development’s 59 units were put to auction recently after buyers reneged on contracts.
Adding to the heavy advertising of apartments in the region that has occurred in recent months, Pindan promoted a sale of apartments with terminated contracts at the weekend. Pindan told WA Business News four of six apartments it sought to auction recently have now settled.
This week, Pindan confirmed the syndicate behind the project was taking legal action against a number of buyers who had defaulted on their contracts. Motoring organisation RAC was previously involved in the project but claimed it exited some time ago.
Many developers in the area have resorted to legal action to enforce contracts, often signed during the peak of Mandurah’s boom in 2007 before construction began.
Falling prices from their peaks have been compounded for some investors by difficulties in obtaining finance from banks, which have become more cautious since the global financial crisis. However, most developers who spoke to WA Business News remained positive about the market, claimed sales were ticking over and believed their projects offered a point of difference from those suffering most under current conditions.
While legal action by Mandurah developers against those who fail to complete their purchase agreements gained some publicity at least two years ago when national group Mirvac sued Perth A-list couple Malcolm Day and Bree Maddox for $2 million, the fact that the trend continues shows just how much the region’s apartment market remains in the doldrums.
While the result of that action has not been reported, in January this year Mirvac booked a $14 million provision on its major development The Point on the site of the former Peninsula Hotel.
Wannunup Developments Pty Ltd, a company linked to listed Perth-based developer Port Bouvard has taken legal action against at least two investors who failed to settle on agreements to purchase apartments in the Oceanique development south of the Dawesville Cut.
One of the investors sought to retrieve her deposit in May last year because the developer could not honour an arrangement for four years’ membership and a $10,000 bar tab at the nearby golf course because the venue’s owner had fallen on hard times.
The course, The Cut, is now operating profitably in the hands of a syndicate of members who bought it in a mortgage sale after then high-profile owner John Kelly ran into financial difficulty.
Port Bouvard managing director John Wroth said the 66-unit Oceanique had not had significant levels of speculative buyers, which meant fewer settlement issues.
“Where appropriate, the company is pursuing legal action against defaulting purchasers,” he said.
“Why should they (speculators/investors) be able to hedge on property at the company’s and our shareholders’ expense?”
Another player is Strzelecki Group, which has two complexes on the coast at the Mandurah marina development, an area where a significant amount of property is up for sale and a number of smaller developers are believed to have gone broke.
Strzelecki Group managing director Greg Poland said 90 per cent of buyers had settled on his upmarket apartments – including The Moorings, which had eight left to sell out of 40 – and the legal action taken so far had not ended up in court.
“We have had a few people go broke,” Mr Poland said.
