Cap Cana is in a Free Fall - Ritz Carlton, Trump and everybody else has left the sinking ship! Investors who expected to be protected by Stewart Title lost their money. Cap Cana has stopped paying the penalties stipulated in the contracts and all the small investors got fucked for USD 134 million just in Green Village alone!! Welcome to Dominican Republic….
The reality is that Cap Cana is close to bankruptcy, a tremendous nightmare for all remaining property buyers incl the few who managed to receive a finished product. Only those wisely flipped their contracts during the Trump at Cap Cana hype escaped the free fall of Cap Cana. The rest are doomed to lose at least 45 - 80% of their investment. Today Green Village stands at a 100% lose and investors should move together in lawsuits against the management, the lies and Stewart Title. The way Stewart Title has handled Cap Cana deposits is a scandal never seen before and they must be held responsible to the last dime!
Sadly enough consumer protection in the Dominican Republic is basically non-existent due to the dysfunctional legal system and corrupt government. President Leonel has personally promoted developments from drug dealers and fraudsters where investors lost money - He doesn’t care about anybody but himself....
Cap Cana Dream Villas Left To Rot
The jewel in the crown of real-estate in the Dominican Republic, Cap Cana, with expensive luxury villas, World Class golf courses designed by Jack Nicklaus, and a marina for the jet set to moor their yachts; is not all it was hyped up to be, say disillusioned investors.
Just a few years ago, when real-estate mogul, Donald Trump was selling multimillion dollars lots on his high-end Farallon Estates development in Cap Cana, many private investors were buying into the dream and investing in what appeared to be a sure-fire win, backed by famous names, large banks and a massive media blitz.
For at least one and probably many more investors though, the promised dream has turned into a nightmare. Early in 2007, Alan Sutherland purchased a luxury bungalow villa in Green Village Residences, an up market development within the Cap Cana project. At US$ 800,000, the villa was not cheap, but the planned infrastructure, including the largest deep-water marina in the Caribbean, golf courses and various large private homes under construction promised a worthwhile investment opportunity.
Alan paid for the villa in full upfront in return for a hefty 14% discount, and duly wired the funds to Stewart Title in the US on the understanding that the funds would be held in escrow and a draw against escrow be made as the villa was completed. It appeared he had nothing to lose, as the developer's contract also stipulated stiff financial penalties for the developer if the villa was not completed by the due date, October 2007.
When October passed, and the villa was nowhere near completed, Alan was assured that although the developer was slightly behind schedule, everything would be completed soon and meanwhile he and the other buyers would be able to collect on the developer's late penalty fees.
Months went by and progress on Alan's and other villas ground to a halt. He and other concerned investors badgered the developer for feedback on what was happening.
The developer responded saying they were doing their best to move the Green Village project along and they were committed to paying all penalty dollars (late fees).
But then with no warning, they canceled the owner’s credit program, and along with it all the late penalty dollars that had accrued. The penalty payment contract it seems would no longer be honored, as the developer was now too far behind!
So Alan turned to Stewart Title who would have by now around 50% of his money still in escrow. After all, his villa and many others in the same project were only 50% completed, and the developer was clearly in breach of contract. Sadly, Alan says that Stewart Title told him that all monies in escrow relating the Green Village project had already been released to the Cap Cana developers and they assumed no responsibility for their actions as it was completed per the Purchase and Sales Agreement and Escrow Agreement.
It is now 2012, more than 4 years after Alan's villa was supposed to have been completed. Alan's $800,000 is now well and truly gone, and in return he has a half-finished, deteriorating carcass of a villa which he cannot use. Alan says a recent site survey showed that well over 100 similar villas (price range 400k – 800k) were now just being left to rot in the sun and rain. The entire Green Village project is overgrown with vegetation resembling a jungle. He says just a select few of the villas have been completed, but there are no signs of occupancy, and no evidence of ongoing work.
Cap Cana say they do intend to finish the villas, but won't give any indication when. They have offered to exchange the villa for an alternative undeveloped lot; which Alan says is worth a fraction of what he has paid for the villa.
A casual glance at local realtors websites show that many are still marketing pre-construction villas in the same Green Village development, which now appear to have little chance of ever being completed.
Alan says that more than 80 private investors are now asking Cap Cana management to either refund their money or finish their villas as they initially contracted to do. Whether that will ever happen is becoming less and less likely as each year passes by.
Cap Cana has publically admitted they have financial problems and defaulted on a bridge loan. Investors though are wondering exactly what happened to the millions of dollars they collectively paid the Cap Cana developers.
It seems that in the Dominican Republic, a written contract is as solid as a snowman under the heat of the Caribbean sun.
Conspiracy of Silence…..Trump, Wyndham, Ritz Carlton are long gone
Yes, with no media coverage or communication from Cap Cana ownership, these 5 star blue chip names associated with the Cap Cana development are long gone. These name brands were instrumental in the marketing of Cap Cana and decision making by owners in purchasing properties.
Wyndham was planned as the managing agent for the property rentals in Green Village. The Trump name was used to sell multimillion dollar lots on the Farallon. Ritz Carlton was supposed to build a first class hotel and casino on the beach near Secrets Sanctuary. Were these big players driven off by the economy (as Cap Cana management would like you to believe)? Or were they driven off by the mismanagements and misdealings of Cap Cana management and ownership?
These corporations allowed their names to be used as selling points. How and if any consequences did they suffer by leaving? One thing that is true – the investments made by the property owners and bond holders continue to suffer. How much of the actual Cap Cana owners personal resources were used to fund the Cap Cana development, meanwhile they pocketed millions of dollars in profits, and allowed the development to disintegrate.
Follow the Money! $134 Million Must Lead Somewhere
Lets check my math – 80 Bunglows at $800K plus 160 villas at $440K equals $134 million dollars. YES, Capcana built two offices that they didn’t need. Partially built 240 villas (without finishing many), instatlled underground utilities throughout the Green Village, but shouldn’t there be lots of money left? I am told that the owners and the Founders remain very, very, very rich, and the owners received financing from the bond holders.
Is the entire CapCana Development in a Free Fall?
Capcana’s Green Village financial collapse may only be a symptom of the large scale failure of the Capcana development. During my visit there were only two restaurants and one swim suit shop open at the marina. The marina is a ghost town. There are numerous stores that remain boarded up, as a result of the start up businesses not making any money. A quick look at the beach club easily demonstrates the lack of maintenance, repainting, replacement, and cleaning necessary to maintain it as a first class facility. The second Jack Nicklaus golf course is going to seed, with no restart date in sight. The plans for first class hotel facilities and casinos also have no start dates. Construction on private residences has stopped leaving huge carcasses. When I played golf at Punta Espada they only had 38 golfers on that day.
When the Cap Cana owners say they have no money for completion of the Green Village project, the real question is: Do they have any financial resources to complete anything in Cap Cana? If you are a bond holder would you trust the current Cap Cana ownership to keep their word based on their previous performance and their lack of management abilities?
Dominican Watchdog Note | Adding Green Village, investors have now lost over USD 500 million on real estate in the Punta Cana area and prices will keep falling!! All unfinished luxury developments are in a free fall incl Roco Ki and Punta Perla. There are no buyers and no finance for this kind of developments in today’s market. Therefore no escape for investors of unfinished properties in Dominican Republic, they should never have trusted Stewart Title with their money!
Dominican Watchdog will be happy to facilitate contact between angry Cap Cana investors in order for them to move forward as a united group. We did the same free of charge for investors in Punta Perla.
Before buying property in the DR you should read these articles:
If you are looking for the best the world has to offer today, you should retire and invest here - Thank me later!
The President is responsiable for the state of the DR! He has had 12 years in office to change the Dominican Republic, little has he achived besides heading one of the world's most corrupt governments. His attitude towards crime and corruption is the biggest problem in the Dominican Republic today - Enjoy this photo of him, Like they say, one photo tells more than a thousand words! Read about Leonel's scandals and drug connections