Business

Politics not the problem, says resort developer

Written By : SUNFIJI BUSINESS. Three New Zealand-financed developments have hit trouble in Fiji amidst the global economic crisis. But the man behind one of those facing problems, Auckland developer
29 Aug 2009 12:00

image Written By : SUNFIJI BUSINESS. Three New Zealand-financed developments have hit trouble in Fiji amidst the global economic crisis. But the man behind one of those facing problems, Auckland developer Neville Mahon, said it is financiers not politics causing the difficulties.
Mr Mahon defended Fiji against New Zealand critics who cite political unrest sparking his troubles.
“People are trying to get me to say something that’s not true and that’s that Fiji’s political situation has caused this,” Mr Mahon told the New Zealand Herald newspaper.
Mr Mahon has been developing the expansion of the Fiji Beach Resort and Spa at Denarau, managed by Hilton. He strongly criticised the actions of his financiers.
The developments in the headlines in New Zealand over their difficulties are:
l Mr Mahon’s expansion of the Fiji Beach Resort & Spa, which was financed by struggling Wellington-based Strategic Finance;
l the big Momi Bay resort complex, which was being largely financed by the now-collapsed Bridgecorp finance group;
l and the Strategic Finance-funded 650ha development parcel known as Denarau Land South.
On Tuesday, New Zealand’s Bayleys real estate tried to sell Momi via auction for the mortgage holder, Fiji National Provident Fund. But it failed to reach the reserve price and was passed in.
“Bayleys is still negotiating with the highest bidder. We are confident of a positive outcome, but there is no timeframe on that,” spokesman Scott Cordes told the New Zealand Herald.
Also this past week, Mr Mahon said receivership was imminent for Denarau Investments, the development and construction company expanding the Fiji Beach Resort and Spa.
This. it has been stressed, does not affect the running of the existing Hilton-managed Fiji Beach Resort and Spa at Denarau, just the expansion project.
“I’m jammed like meat in a sandwich between Bank of Scotland and Strategic,” Mr Mahon told the New Zealand Herald.
Strategic loaned NZ$75 million and Bank of Scotland provided a NZ$45 million facility on the lavish beachfront property which opened in 2006, the New Zealand Herald said.
The expansion via development of an extra 90 villas cannot currently be finished and NZ$1 million of investor payouts are frozen.
High profile Kiwi and Australian owner/investors forked out in the vicinity of NZ$400,000- NZ$1 million each for the sumptuous villa apartments, the New Zealand Herald said.
Ex-All Blacks Andy Haden and Ian Jones, Premium real estate owner Brian Guy and Viaduct Harbour Holdings’ Rob Campbell are some.
Some owners now want to form their own business to complete the development.
The New Zealand Herald quoted this group as saying: “The Villa Owners’ Association [VOA] is in discussions with the pending receiver to ensure that the resort continues to provide the highest levels of service to guests and propose a structured management agreement and level of transparency that will alleviate the historical issues that have led to the current set of circumstances.
“The VOA is very confident that with the correct systems and structure in place, the Fiji Beach Resort & Spa will be completed as originally intended and continue to provide holidaymakers with the ultimate Fijian holiday experience.”
Strategic chief executive Kerry Finnigan praised the hotel and villa project, saying he had visited it recently and that it was by far Denarau Island’s single best international resort.
But Mr Finnigan also cites a concept he calls “Fiji risk”, saying the country has particular troubles recognised by financiers.
Mr Mahon has been desperate to complete the partly finished 90-villa development, a bistro, swimming pools and back-of-house resort upgrade to Hilton’s requirements, the New Zealand Herald said.
Without the upgrade, the 90 new villas can’t be opened and without more cash, he can’t complete the villa project.
Richard Hatherly, an entrepreneur originally from Dunedin, scoffed at talk of trouble in Fiji and told the New Zealand Herald his two-star resort is “cranking”.
“We’re under way with a second resort, with plans for another four or five sites,” he said.
And Premium’s Mr Guy told the New Zealand Herald he is unconcerned about the income freeze on his villa investment at Fiji Beach Resort and Spa. He said he never bought his villa for the return but for lifestyle and family reasons.
Philip Toogood, of Bayleys Fiji real estate, told the newspaper New Zealanders considering buying property in Fiji have one key lesson to learn: buy first for the lifestyle, second for income.




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