North Dakota: More come forward

Following our story on Tuesday when one investor issued a warning against overseas investment company North Dakota Developments (NDD),

One investor, who wishes to remain anonymous, told PropertyGuru: I want to help Singaporean investors not to be victim of another possible scandal.

The Asia-based investor, who divulged he was also a victim of the now failed EcoHouse Brazilian social housing project, alleged there were striking similarities between NDDs offering and the EcoHouse promises.

He said that both investments were being marketed as offering substantial guaranteed income of between 20 percent and up to 40 percent, an Escrow agent that he alleged was also the lawyer of the firm, subsequent construction delays and unpaid income.

The investor said he has invested in six units with NDD and detailed his allegations individually.

With the Waford West project, after inordinate delays and changes to the contract, the two units were delivered but failed by far the advertised return. The promised occupancy was 90 percent at US$139/night. After one-year, the occupancy rate is 66.92 percent at US$42.33/night.

In response, Robert Gavin, Chief Executive Officer of North Dakota Developments, told PropertyGuru: No returns or occupancy levels were promised. Projections were based on an independent market study.

Watford West has tenants in place already and as we come into the spring, we fully expect more tenants to move in and thus occupancy levels to increase.

We currently have strong interest from a number of very large companies that will bring in many additional guests, and are conducting tours of the sites to such companies on a regular basis.

The investors also alleged problems with his Montana project, where he says two units were paid-for but have experienced the same delays, and the units were not delivered.

Gavin responded: I can confirm that half of the rooms at our Montana site are in place and have been since August 2014. The third party modular construction company ran into financial difficulties that ultimately delayed the project significantly. These delays and their causes have been communicated to buyers already, and we are now working hard to resolve this issue.

The investor also alleged problems with the Watford East project, and again alleged delays and non-delivery on units.

Gavin said: We were initially unable to get consent for this site in its current form due to traffic concerns however we will be in the process of submitting a revised planning application soon as we strongly believe in the demand for and merit of Watford East.

As soon as it became clear that planning consent would not be given, we found this unacceptable for our buyers so sourced an alternative project for them to consider transferring to if they wish.

The investor also purchased units at the Parshall project.

He said: This project is due to be completed this summer, but I havent received any updates yet, Also, they were reluctant to give me the 20 percent guarantee as promised.

Gavin replied: I am proud to say our Parshall project is 100 percent on track. Significant ground works were undertaken last summer before winter set in, and this was communicated to buyers (with on-the-ground imagery) through our regular construction updates.

As per the schedule, further site work could not be done due to the winter weather.

All buyers in this project, if they chose NDD Project Management to manage their room, would have been offered an assured rental of up to 20 percent yields. All agents are aware of this and it is clearly stated on marketing materials provided to agents and client contracts.

The investor said he is considering his legal options and estimated he has allegedly lost upwards of US$265,000 in the North Dakota Investment, and a further US$74,000 in the EcoHouse investment.

He also alleged that Gavin, through his real estate agency Property Horizons, was involved in selling the EcoHouse investments in the United Kingdom.

Investor Gaston Procopio, who originally issued the warning on Tuesday to Southeast Asian investors, added: During the last four months I have been in touch with 20 investors who have files a complaint for fraud at the U.S. Securities and Exchange Commission.

Yesterday I heard from one Singapore banker who bought close to US$300,000 worth of units with NDD. On Wednesday a French real estate agent contacted me; he had advised 25 clients there to buy one unit each.

Gavin concluded: Whilst, as previously stated, we are not in a position to comment on individual cases in the public domain, I can confirm that we are in direct contact with buyers.

Andrew Batt, International Group Editor ofPropertyGuru Group, wrote this story. To contact him about this or other stories emailandrew@propertyguru.com.sg

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