[Article] Investors stand to lose on Bulgarian apartments

Victor

http://www.breakingnews.ie/2004/06/26/story154215.html

Investors stand to lose on Bulgarian apartments
26/06/2004 - 08:48:51

Up to 200 Irish investors may stand to lose €6.5m after the developers of a Bulgarian apartment complex that they had bought into went into liquidation.

The builders of the Panoris holiday resort walked off-site when they learned that its Dutch developers had run out of money.

Platinum Developments, the Dublin-based firm that sold the apartments here, has told investors that they are trying to put a rescue deal together.

The company is trying to take over the site, which is close to completion.

Platinum said that it had investigated the Dutch firm before agreeing to act as its Irish agents, and that its reputation was solid.

Individual investors stand to lose between €15,000 and €50,000.

Victor

http://www.thepost.ie/web/DocumentView/did-662074172-pageUrl--2FThe-Newspaper-2FSundays-Paper-2FNews.asp

400 Irish face €12m Bulgarian property loss
27/06/04 00:00
By Susan Mitchell

More than 400 Irish investors are facing total losses of up €12million after the assets of a Dutch developer behind a five-star resort in Bulgaria were frozen.

The revelation is likely to cause huge concern for the thousands of Irish investors who have bought properties in eastern Europe.

The investors in Bulgaria, who each deposited about €30,000 in the Pomorie Golf & Beach Resort, have been left in a financial limbo after discovering that the developer's assets had been frozen.

The multimillion euro resort, located along the southern Bulgarian coastline on the Black Sea, was to include more than 750 apartments, luxury hotel suites and penthouses.

Irish investors either bought directly from the developer, which is registered in Holland, or purchased properties through British agents or the Irish estate agencies, Platinum Developments, and B&D Bulgarian Properties. Last week, Platinum Developments, the main Irish selling agent, sent a letter to clients.

``We are writing to you as we have lately become concerned that Capital Ground and Building Investment NV may be experiencing cash flow problems [which] may impact on its ability to complete the development,'' the letter says.

Some Irish investors have sought legal advice. One investor who didn't want to be named said: ``I have been to see my solicitor. I am not going to take this lying down. I bought this through Platinum, who told me that everything was in order. I hold them responsible.''

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Assets of Bulgarian resort firm are frozen
27/06/04 00:00
By Diarmaid Condon and Susan Mitchell

Revelations about the potential collapse of the Pomorie Golf & Hotel resort in Bulgaria could have a negative impact on the attractiveness of the Bulgarian property market to Irish investors.

Last week, some investors in the five-star resort learned that the assets of the developer, NV Capital Ground & Building Investment, had been frozen in Holland.

The resort, located in the southern coastal area of Bulgaria on the Black Sea, close to Bourgas airport, had a large number of Irish investors as well as many German and Dutch purchasers.

More than 400 Irish investors had paid deposits totalling €12 million on apartments in the exclusive resort.

Joop Witaar, Capital's representative in Bulgaria, said the company was in financial difficulty and had been unable to pay him for work carried out in the eastern European country.

Despite this, he claimed that investors would not lose the millions they have invested. Irish investors either bought directly from the developer or through Irish estate agencies, including Platinum Developments and B&D Bulgarian Properties.

In a cautionary letter issued to investors last week, Platinum warned clients that they ``may wish to reconsider proceeding with a purchase in circumstances where contracts have not yet been signed and returned to the developer''.

One of the investors Tom Waters said: ``I was another one of those suckers who bought out there. I was out in Bulgaria to pay off the rest of the deposit ten days ago.

``There has been no building going on for weeks. I was told there was a problem with the foundation of the hotel. It was a load of rubbish.''

Waters said he had received no notification from Capital and that he learned about its financial difficulties from an Irish investor, who had been notified by Platinum Developments.

The situation is perplexing, as the developer sold the vast majority of the planned units.

Land and labour costs in Bulgaria are not particularly high, especially in the undeveloped southern region.

Given that units range in price from €60,000, questions are likely to be asked about the substantial deposits demanded by the developer.

Capital originally claimed that the use of a Dutch company would help to avoid arcane Bulgarian laws governing land purchase, so NV Capital Ground & Building Investment registered its offices in Holland.

Ype Batstra, a director of NV Capital, claimed that the restriction on funding in Holland was due to a standard investigation undertaken by the Dutch Department of Economy Control.

He said this investigation resulted from the large amounts of tax being reclaimed by the company under the Dutch double taxation treaty with Bulgaria. The Dutch embassy in Sofia, the Bulgarian capital, could not verify the existence of the Department of Economy Control.

The embassy said it was aware of a problem with the Pomorie development and that a member of their commercial department would be visiting the area this week to examine the situation.

Bastra also told The Sunday Business Post that Platinum Developments, the Irish estate agency, had signed an agreement to purchase the entire development from Capital.

Platinum said no such deal had been done, but that it is was eager to continue the project. Directors from Platinum Developments and B&D Bulgarian Properties travelled to Bulgaria last week in an attempt to solve the development problems for their investors.

Platinum said it has secured their clients' investments against the land on which the development is being built.

Representatives for both companies said they were confident that building work would resume on the project and that investors would not be left out of pocket.