One of the development partners is put into administration leaving the other to find the funding to continue, it can't and says it has put the project on hold until the economic climate improves.
This leaves the property investors with a sour taste in their mouth. They seek legal advice and find that on close examination of their contract an exact completion date isn't actually specified. They want their deposits back. The developer won't give anything back saying that the project will be completed in the future.
Now the lawyers are probably circling hoping to make some money out of the misfortune of these investors. Where in the world is this? Dubai? Spain? Bulgaria? No, it is in Leeds in the UK and is perhaps a lesson to everyone in terms of reading the small print.
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Of course, few could have foreseen the dire economic downturn in 2007 when property investors were still on a high, spending and hoping to see the benefits of their investment in a few years. This particular £225 million project with its twin glass towers looked good and is located in a prime position near the railway station but now it looks like what it is – an abandoned site with no visible construction having started.
Now there are calls for it to be turned into a temporary park until the developers are able to start work. Nearby another development that has stalled is being turned into temporary allotments and a five a side football pitch.
But it shows that no one is immune from the burst bubble that is putting an end to speculation as the thread on this matter on the propertycommunity.com forum shows. There are also extensive reports on the skyscrapercity.com forum with posters also pointing out that there is no specific completion date given.
Indeed in Dubai, where this kind of misfortune is more common because of the rampant rise of speculation, some are now claiming that off-plan as we know it is dead.
Meanwhile, as far as Dubai is concerned the inevitable question is being asked on the forums – is the Dubai property market falling apart or finding a level?
With prices coming down to around the 2005/2006 level, many do thing the bottom has been reached or is close. Fly by night developers are unable to survive the downturn and there are predictions of quality replacing quantity.
There is nothing wrong with a bit of optimism. This doesn't mean talking up the market, just looking ahead with some sensible predictions. However every week there seems to be a new dire prediction coming from the analysts that property prices still have a long way to fall before reaching a level.
So who is to be believed? Some, perhaps those who have had a bad experience are pretty scathing about any talk of bottoming out and recovery. Indeed on the propertycommunity.com forum one poster declares: ‘You are not selling a dream anymore, you are perpetuating a nightmare'.
And this is what property investing has turned into for some. But on the forums it seems only the moans and groans come through. Those who are just sitting tight, getting on with things or even doing very nicely don't post so the overwhelming impression is one of doom and gloom.
So there could be lessons to be learnt for those property investors looking at still emerging markets although the Leeds scenario does show that even mature markets have their problems. One interesting point about emerging markets is trying to find out what is happening. Things have gone quite quiet in relation to some markets and this is brought up in relation to Cape Verde on the housepricecrash.co.uk forum with poster wondering what is happening there.
A year ago Cape Verde was described as a major hot spot. Tourism was booming, the government was spending massive amounts on infrastructures and cheap airlines were gong to be falling over them to secure slots.
But where is the hard evidence that this is happening? The answer is hard to find. However a post from one potential investor who has been there for a holiday does provide some information.
He reports that there is a lot of building going on and that the beaches are great and prices of apartments have come down. But the infrastructure has a long way to go especially in terms of health care facilities.
And further research shows that the cheap airlines haven't arrived yet so high flights costs could affect tourism figures. Then of course there is the recession – Cape Verde does not seem to be on the top ten holiday destination at present.
