Developers of Jaco Condo Project sue bank for $120 million.
Yesterday morning, the Internet was flooded with the Press Release FROM the developer of a Jacó condo and hotel project suing its lenders, seeking arbitration on $120 million that has caused what it claims was a successful project on the verge of falling apart. No doubt the $120 million was an eye-opener of what is at stake.
The developer, Desarrollos Naturales de Costa Rica S.A., named Banco Centroamericano de Integracion Economica and Banco Improsa S.A., as the defendant. It was pretty clear the developer wanted to make everyone aware of whom the “Bad Guy” was and sought public support. Banks have always been the portrayed as the Snidely Whiplashes.’
Just about every Social Media website (Twitter mostly) had the story copied from every major website like Yahoo, PRWeb and CNBC. Type in Desarrollos Naturales de Costa Rica S.A in Google and the first three pages are filled with the story.
Without getting into the legal grit, lawsuits of this nature have two things in common, money and most important, time, which they are trying to buy. Obviously, it appears to be some type of investment tactic for the developer, in a wishful wish the Costa Rica economy turns around, which it is.
Was it a surprise? Not really. The problem has plagued other Costa Rica developers, where banks have pulled their promises of financing and continuing to provide money for construction. In some cases, banks are now seeking to foreclose on the loans when developers have breached their promises to buyers. See Investing and Real Estate Tips and Real Estate Retirement.
For those that have been watching the Jaco project it represents either an icon or eye sore (depending on your political view) of development with a bit of controversy. The project is the last development that had no height limitation. Currently, the new Master Development Plan restricts height and density in and around Jaco, so real estate of this value and nature with breathtaking views of the coastline will be a hot item and one where an investment would be valuable.
On a fishing trip to Jaco last November, it was evident the project was running into problems, rust was developing on rebar and the place looked like a graveyard of workers for the contractor, ICON. A developer friend pointed out, they (the developers) were having problems getting people to commit to buy even if the lawsuit claims that over 75% of the project has been sold. Personally, for a massive project of this nature, I would think that the break even point would be around 50%. And as for the $120 million, God-knows what the true amount really is, it may only be half that.
Back in 2000, Jaco Beach started to become of the top real estate buys in Costa Rica that ranged from luxury ocean view and beach front villas and condos to smaller more affordable properties in and around the town. A few minutes north, Los Suenos Marina and Resort is one of the top places in Costa Rica.
It has become the largest and most developed beach town in Costa Rica because of its proximity to the capital city of San Jose. With the new highway almost completed, making it an hour’s drive from San Jose, investors and developers gambled on the overall property values in Jaco would soar. Back in 2007, Costa Rica surpassed Hawaii as the number one destination, with over one million tourists visiting.
IT IS A VERY IMPORTANT PROJECT I’M SUPPORT THE EXELENT IDEA. MY CONCERN IS WERE YOU ARE GOING TO PROCESS O TREAT THE BLACK WATHERS…BEST REGARDS AND GOOD LUCK..