I wonder if they are in financial trouble and having difficulties with cash flow and need these sums from their current home owners to finish the project. I have heard in the market that they are possibly having difficulties. It adds up they would then try and get some money by applying these extortionate hidden fees as banking finance for them would be difficult to obtain. Here is what lead to this theory.
The Scenario
* No customer was told about these additional fees at sign up.
* The project is running 12mths late and so all building progression payments are on hold until handover to the customer on completion.
* They have not received a payment from me in over 18mths and I’m sure this is the case for most investors.
* Slump in the market equals no additional sales and almost impossible for developers to get access to finance.
* They have another project at piling stage, no chance of selling any apartments there to cover the current project.
* They would have already paid UDC for land on new project and contractors for advance payments. These funds could have partially come from the current tower against advance sales in the new project.
* Stuck with huge inventory from current project as they were looking to sell apartments at huge mark-ups at the end of the project. This has not transpired, they are left with massive amounts of units and this would be greatly hindering cash-flow.
* Not likely to sell any new apartments in the foreseeable future even if they attempt to sell at QR10,000 a sqm (which they have already tried with no success). Banks know this so building finance against future sales would be difficult to obtain.
* Apartment at QR10,000 a sqm would run against budgeted forecasts of much higher prices so they have a cashflow and profit issue even if they sell and another project underway.
* Additional fees if charged for all essential services is approx QR200,000 per unit multiplied by 200 units = QR40,000,000 --- instant cash flow problem solved.
They are 80% finished the project, have not been paid anything from owners for months or years, stuck with inventory, another project with little prospects of sales and they need to complete the job. It seems to make sence.
Either they are broke, suffering a major cashflow issue or they have plenty of money but are simply unethical operators.
I wonder if they are in financial trouble and having difficulties with cash flow and need these sums from their current home owners to finish the project. I have heard in the market that they are possibly having difficulties. It adds up they would then try and get some money by applying these extortionate hidden fees as banking finance for them would be difficult to obtain. Here is what lead to this theory.
The Scenario
* No customer was told about these additional fees at sign up.
* The project is running 12mths late and so all building progression payments are on hold until handover to the customer on completion.
* They have not received a payment from me in over 18mths and I’m sure this is the case for most investors.
* Slump in the market equals no additional sales and almost impossible for developers to get access to finance.
* They have another project at piling stage, no chance of selling any apartments there to cover the current project.
* They would have already paid UDC for land on new project and contractors for advance payments. These funds could have partially come from the current tower against advance sales in the new project.
* Stuck with huge inventory from current project as they were looking to sell apartments at huge mark-ups at the end of the project. This has not transpired, they are left with massive amounts of units and this would be greatly hindering cash-flow.
* Not likely to sell any new apartments in the foreseeable future even if they attempt to sell at QR10,000 a sqm (which they have already tried with no success). Banks know this so building finance against future sales would be difficult to obtain.
* Apartment at QR10,000 a sqm would run against budgeted forecasts of much higher prices so they have a cashflow and profit issue even if they sell and another project underway.
* Additional fees if charged for all essential services is approx QR200,000 per unit multiplied by 200 units = QR40,000,000 --- instant cash flow problem solved.
They are 80% finished the project, have not been paid anything from owners for months or years, stuck with inventory, another project with little prospects of sales and they need to complete the job. It seems to make sence.
Either they are broke, suffering a major cashflow issue or they have plenty of money but are simply unethical operators.