Though there are a lot of financial risks, one way to earn more money in the property investment business is to purchase an overseas property. The Kawarau Falls was a real estate project in New Zealand planned to become a world class village resort. When this project was introduced to the international property investment market, a lot of Singaporean and Malaysian investors found promise in it and decided to invest. However, no one expected for things to go south.
The Overseas Property Dispute
This NZ $2 billion project had 109 foreign investors who bought into it. This New Zealand property was to become a world-class village resort that will feature three five-star hotels, four-plus-star hotels and three apartment buildings. It was planned to be developed along the shores of Lake Wakatipu near Queenstown.
Unfortunately, the developer paused development when the global financial crisis struck. Due to this, the company who allotted the vendor rights had to issue a settlement notice for the investors’ purchase in 2011. Despite the notice, none of the investors wanted to settle as they were asserting a breach of contract.
To appease everyone, the company decided to cancel all sales and purchase agreements. A Straits Times article revealed that the investors sought out a court order but “the company counterclaimed for damages for loss of bargain.”
Eventually, the New Zealand Court of Appeal ruled that completion of stages two and three of the project should be considered a vital term in the sale and purchase agreements. The ruling states that the investors are legally entitled to NZ$10 million in deposits. The Court of Appeal furthers that the investors are not liable for the NZ$36 million in damages demanded from them in a counterclaim.
The investors were also granted 75% of their legal costs. As of now, the sum of payment is still being calculated. Out of the 109 investors, only 71 of them stayed with the nearly five-year-long case. Some had previously opted to pay a portion of damages.
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