CAVEAT EMPTOR EMPHASISED FOR FOREIGN INVESTMENT
By Jane Humphries
In an unprecedented move the Department of Fair Trading and The Real Estate Institute intend issuing a joint warning regarding property investments in Asia, with particular emphasis on Indonesia.
It has recently come to the attention of the consumer affairs watchdog that a number of Australian citizens have lost tens to hundreds of thousand of dollars in ‘dodgy' property deals, particularly in tourist Mecca - Bali. Where vacationing Aussies are promised all kinds of ‘too good to be true' returns on their investment, including annual returns up to 45% per annum*, from spruiking developers.
Mr. Darren McGee (Sylvania Waters, NSW), a regular Bali visitor was lured into such a property offer by Indonesian company Ellora Villa Developments, a Bali based corporation. Mr. McGee told the Illawarra Mercury: 'My wife and I had put down a US$10,000 deposit on a development in Sanur called Arjanta Villas. The Swiss saleswoman promised us the property would be finished no later than March 2006. It is now August 2007 and the development has not even begun. We have asked repeatedly for our money back and we get stonewalled each time. Our daughter was injured in a car accident a few weeks back and this money would be very handy right now to assist in her rehabilitation.'
A similar experience was shared by Ms. Barbara Johnson (Cronulla, NSW) who purchased 50 year leasehold of a villa in Phuket, Thailand from Phuket Island Properties. Ms. Johnson said, 'We feel very stupid that we fell for their sales pitch. They showed us all these spectacular looking brochures and marketing material, and we thought we were getting an absolute bargain. But when the villa was finished, it was practically collapsing piece by piece in front of our very eyes!'
A Department of Fair Trading spokesperson commented, 'This is not atypical of many experiences of Australians investing their hard earned money in Indonesian property deals. Investing money into these types of places usually means one forfeits his or her legal protection and when things go south such between the investor and the developer, there is no legal recourse available for foreigners to ensure their investment is guaranteed.' Offering a warning to other such would-be investors, he added, 'Obviously not all foreign investment companies are unscrupulous, but do your homework before you part with any sum of money, and seek independent legal advice before entering into any contract or agreement.'