Hi there, Just wondering whether anybody else has been looking at the Punta Perla development in the Dominican Republic ? We're seriously tempted by the impressive location & facilities, 8% net guaranteed rental for 5 yrs and guaranteed 70% non-status mortgage. Seems to be a big development offered for sale by several agents i.e. Punta Perla Sales, Aquarious Properties & Equity Buy. Does anybody have any thoughts on this or any experience with the above agents please ?
Hi Kaz I`ve put down a deposit on this development through punta perla sales. Nothing much seems to be happening there at the moment but the first phase isn`t due to be ready till oct 2008. Everything seems in order and apparantly prices will be rising by 25% later this year or early next but they were set to rise in March 06 so who knows ?
Hi pipinpipin, Thanks v much for the reply - was beginning to feel as though I was the only one in the world interested in it ! We've more or less decided to go for one of the golf villas around the Montgomerie course but I'm going to try & get a bit of legal / tax advice first before I jump in. Can I ask what sort of property you went for please and are you at the stage where you've put down 30% ? It does seem v attractive & I can't see any disadvanatages with it at the moment but I'm a bit hesitant because I was all excited about something else 2 mths ago and then there turned out to be too many "ifs & buts" with the deal so we changed our minds.
Thanks pipinpipin (love the name - the sound of it makes me smile !) We've been in touch with the Law Society & they have pointed us in the direction of a lawyer in Hull who is qualified to practise in DR matters. Been in touch with him & he seems reassuringly familiar with the development so it's all systems go at the moment. Thanks for the reply - its nice to get a bit of feedback.
Guaranteed Rental !!!! RUN as fast as you can from this development. I have seen this time and time again. To good to be true ? Then it normally is. Will this development be built? Is your money held in an independent ESCROW account. or can the developer get his hands on it? Sorry to be negative but this is exactly what was happening in Spain. Is the management company real ask to speak to them!! Bet you cant. NO ONE CAN GUARENTEE YOU RENTAL it is just a sales pitch to get money from you. Please spare yourself the hassle and invest with a builder that can show past projects and where you can speak to previous investors.
Message for Pipinpipin, Hi there, after a few months delay we've finally received our contract report from the Max Gold solicitor. Must say some of it makes for very nervous reading & we're considering pulling out. Assuming you appointed a solicitor from the same firm & just wondering whether your contract report rang any alarm bells or not ?
Hi Kaz, it would be fair to say there were a few alarm bells, but I still proceeded with the purchase. The first phase is virtually sold and this was the reason I bought, getting in at a very early stage with a cheaper price and higher returns ! I did appoint a lawyer and the contract, although not escrowed, was acceptable to my risk. Did you pull out ?
Originally posted by pipinpipin: Hi Kaz, it would be fair to say there were a few alarm bells, but I still proceeded with the purchase. The first phase is virtually sold and this was the reason I bought, getting in at a very early stage with a cheaper price and higher returns ! I did appoint a lawyer and the contract, although not escrowed, was acceptable to my risk. Did you pull out ?
If you have done your homework, you would have seen that the Carraibean area is filled with much better deals than Punta Perla. But it is easier to take the deal offered agresively by reakl estate agents, isn't it?
Turks and Caicos, Bahamas or even Belize offer infinitely better deals than Punta Perla.
The prices on PP have always looked expensive. In early? its 4 years too late in the cycle for US/$ related markets.
An International Real Estate friend of mine (Based Florida) said US buyers of PP dried up in Sept 2005 when the US market turned. Conversely a few Brits kept buying, no doubt using the front page of the Daily Express as their due diligence and research!
US property prices (which the DR will follow with an 18 month to 2 year lag) boomed away from their long term average increases, fuelled by speculation funded by artificially cheap debt following the FED lowering interest rates after the dot com crash and 9/11. Not even the most bullish bulls deny that. Now increasing interest rates and credit tightening has cut off the supply of ‘free’ money and demand has fallen off a cliff. Any equity a property gains that is not underpinned by market fundamentals is always at risk of evaporating. Prices are falling and there is another 2 years of readjustments as a the market shakes the over exposed out of the tree.
Demand comes in two forms none discretionary and discretionary. None discretionary being ‘I need a house to live in so I’ll buy one’ (although they have a choice to rent). Discretionary buyers being second/vacation home buyers, investors and flippers/speculators. These buyers don’t by definition need to buy. Many of the reasons discretionary buyers buy a second or third property (to make a profit on letting it, attain capital growth, not to miss the boat or have kudos with the Joneses have disappeared) and with it most of the demand for developments like PP.
Any guaranteed rental income scheme (if this thing ever gets built and the scheme honoured) is loaded into the price you’ve contract to pay, they’d be giving you your own money back! Oh and the management and maintenance charges will ensure the developer keeps a huge slice of it. To look at a glossy brochure and swallow a woolly sales pitch promising guaranteed rentals which are not contractually backed up, is naïve in the extreme.
IMO buyers of PP have paid too much, on poor terms, at the wrong time in the economic cycle.
A few basic rules when investing in property abroad:-
1. At least take the same level of care and caution when buying property in a foreign country as you would in the UK (i.e. employ a subject mater expert lawyer to advise/act on your behalf, as opposed to one recommended by a vested interest (VI), or rely on a commissioned sales person).
2. Take everything people with a VI’s (i.e. developer/sales agents) say with a large pinch of salt and test their statements against market reality (do your own due diligence (DD) ).
3. If the price/deal seems too good to be true it usually is. However the prices on PP always looked expensive and the guaranteed rental a sprat (or more accurately an artificial lure) to catch a big deposit.
4. Always take into account the cost of buying and selling when doing your DD. In places like Spain and the US these can be high and erode your profit or increase your loss. Also gain a detailed/realistic budget of the running costs of the property and taxes you will incur as an absentee owner.
5. Take time to research what drives the market locally (both historically and currently) e.g. with average property price rises in Florida historically being 3 to 4 % per annum and with 2004/05 being circa 15% and 27% respectively, and interest rates being raised every month it was ‘buyer beware time’. Remember fundamentals need to underpin the market as their wont always be a 'greater fool' to off load to.
6. Never believe that your property has gone up just because the developer is charging new buyers ‘fresh off the plane’ a higher price than you paid six months earlier. Resale’s abroad (especially where there’s overdevelopment and/or a none existent or weak resale market), do not command ‘new property premiums’ and can take years to sell if incorrectly priced.
7. Buying a property abroad is not a ‘passive’ investment; you’re starting a business the main asset of which in hundreds or in Florida’s/Caribbean’s case thousands of miles away.
As an investor in punta perla, I search the web for as much info as possible and wish to exchange thoughts with other buyers and you are there on all of them, namely the singing pig forum, re-iterating, word for word the same tripe about the us market. When did the DR become the latest state of America. What is your aim in continually slagging off punta perla. Perhaps your bitter at the current prices you would have to pay cos you didn`t have the bottle to buy when the development was first released. It`s good that you had the foresight to sell your business in the US before everything collapsed, or didn`t, but I fail to understand what value your negative input can serve. People will make there own mistakes in life and you don`t strike me as the caped crusader type, trying to save the people of the world from making the wrong investment. What you actually say is contradictory to what is actually happening. I understand donald trump is investing billions in the DR. Shame you weren`t on his list of advisors to call, you could have saved him as well.
FYI the whole of the Caribbean is economically linked to the US and the greenback. Many ex Dutch and British colonies won’t accept sterling or Euro but will fall over themselves for the Yankee dollar.
Putting aside the fact the Island of Hispaniola is a poor, crime ridden and third world country (the capital of the DR half of the island recently had 3000 troops deployed to try to give confidence to the population that the mass wave of murders could be curbed, without much success I might add.)
The US property market is going into meltdown anyone who doesn’t know this is either in terminal denial or just arrived back after 12 months on the moon.
PP as an off plan project is unsustainable against the credit tightening that is rippling through the markets.
Donald Trump has form on backing big global projects at the wrong time, that go belly up loosing hundreds of million for small investors. He’ll be fine it’s the small investors that will loose their shirts.
The little picture is PP may not get built (or certainly not as sold in the brochure). The guaranteed rental is nothing of the sort. All operating costs will be much higher than anticipated. The ripple from the US will make the prices paid in the DR look scarily high.
Look at the big picture there is a global tightening of credit, the nect 10 years will be nothing like the last.
Good luck with your investment you are going to need it.
Originally posted by pipinpipin: pablo silver or lead
As an investor in punta perla, I search the web for as much info as possible and wish to exchange thoughts with other buyers and you are there on all of them, namely the singing pig forum, re-iterating, word for word the same tripe about the us market. When did the DR become the latest state of America. What is your aim in continually slagging off punta perla. Perhaps your bitter at the current prices you would have to pay cos you didn`t have the bottle to buy when the development was first released. It`s good that you had the foresight to sell your business in the US before everything collapsed, or didn`t, but I fail to understand what value your negative input can serve. People will make there own mistakes in life and you don`t strike me as the caped crusader type, trying to save the people of the world from making the wrong investment. What you actually say is contradictory to what is actually happening. I understand donald trump is investing billions in the DR. Shame you weren`t on his list of advisors to call, you could have saved him as well.
I can repeat once again: every child in USA knows that DR is much worse investment than Turks and Caicos, Bahamas, Panama or even Belize. This is why few americans invest in DR and this is why DR property sharks are making all the efforts to sell stuff to uniformed Brits.
I guess only time will tell. If we believed everything we read in the papers we would never venture in to anything. It wasn`t so long ago the media wagon wanted us to believe that Iraq had weapons of mass destruction !!! In 2003 we were being informed the housing market was set to crash in the UK. The spice girls were re-forming. This is a long term venture for the majority of investors. What will the world stage look like in 10 plus years ? And I really don`t think the children of America are that well informed, not unless it involves the cost of a big mac and super size fries.
Originally posted by pipinpipin: And I really don`t think the children of America are that well informed, not unless it involves the cost of a big mac and super size fries.
Of course they do not know the value of money. But they see that their parents to not take them to DR but ot other more beautiful and safer Carribean countries.
Have you ever been there yourself. I have been 3 times and have NEVER witnessed anything other than good hearted and friendly people. I accept that if you go to the slums of santa domingo, your more than likely going to come unstuck, but the same can be said of hackney at 1am or any other populated city. Venture 3 miles out the safe zone of rio de janeiro and you enter into a world not known to the average person. A high crime rate between rival gangs is typical where there are social and economic problems. When was the last tourist murdered in the DR ?
Very usefull links, thankyou. It makes for interesting reading, and I do like to look for the positives, such as the decline in murders for 2006. I couldn`t find the article that states two Canadian tourists were murdered. As I stated previously, the discussion is about the Punta Perla development and not the conflict between unemployed, drink and drug fueled gangs that kill one another in the suburbs on a daily basis. It is true, the DR has a long way to go before prada and Gucci line the streets of the capital, however, with time, the scale of these developments will offer employment to many and this in itself is the beginning of the cure. As I said, I have been to the coastal resorts and have always had a safe and relaxing holiday which is the idea happening on the east coast. I accept this is not for you and Pablo but it is for several thousand others that have invested in theirs, and the Dominicans future. I really can`t understand your involvement on this particular discussion when you have absolutely no financial interest in it.
