EXCLUSIVE: Several Singaporean investors in EcoHouse, the developer of Brazilian social housing projects in northeast Brazil, have handed their cases to law firms as a result of increasing frustrations with delays to promised payouts from the company.
Last week the developer, under pressure from its investors, updated its websites and offered the clearest indications yet of the probable dates of expected completion for all phases of projects sold to Singaporeans.
In 2012 EcoHouse was likely the most successful single overseas property investment among Singaporeans.
Several EcoHouse investors known to PropertyGuru, both of whom declined to be identified, told me they have put matters into the hands of legal representatives after learning their investments could be delayed for an additional two months on top of the current two-month delays that are already being experienced.
Some local investors recently made the trip to Natal, in northeast Brazil, and saw the developments and EcoHouse's operations for themselves. Many declared themselves happy with the progress.
Since starting sales in Singapore in September 2011, EcoHouse estimates to have sold substantially more than 1,200 individual investments to in excess of 700 individual Singaporean investors though its ‘Minha Casa Minha Vida’ Brazilian social housing programme, translated as 'My House, My Life'.
Any delays to contractual delivery dates are backed by contractual penalty clauses which provide an additional one percent to investors for every month their returns are delayed.
Through its recent newsletter to its investors, EcoHouse said: “As in any real estate transaction there is a period of handover that needs to be accounted for. This can be anywhere from between 30 and 100 days after completion, and this is completely out of our control.”
“The additional period required is for all final paperwork to be processed by the relevant authorities and for bank and MCMV inspectors to complete final checks. Finally, this period allows for the Brazilian end buyer to take possession and for the bank to process final payment to EcoHouse.”
“As we aim to be completely transparent in the entire process we therefore must make our investors aware of the above in light of our renewed commitment to communicate as accurately and as regularly as possible,” the spokesman added.
The spokesman further highlighted several reasons for the current delays, including nationwide bank strikes and a failure to have the optimum construction workforce for the necessary amount of time.
Last month EcoHouse expanded its network in Asia-Pacific with the opening of an office in Shanghai, joining the existing Singapore and Kuala Lumpur offices in the region.
The spokesman told PropertyGuru that everything is being done to mitigate the current delays, and to better communicate the situation to the impacted investors, and to facilitate payments as soon as possible.