Wednesday, June 30, 2010

Riffa Views Bahrain: GP Zacharides Walks


Because if it’s not remarkable it will become invisible.

The Gulf Daily News reports that GP Zacharides, one of the main contractors at RV, had terminated its contract due to non payment of some BD4 million due since February.  
"We have been left with no option following numerous attempts to come to a mutually-beneficial agreement with the client to right the debts outstanding since March and provide comfort that future dues would be paid when due," he said.

"Unfortunately, it is reported that the client could not provide this due to their current and longer-term financial outlook."
GPZ's was contracted to build 300 villas in the Lagoons section of the project.   It claims to be owed BD4 million since last February.  With demobilization and other termination costs, its claim may more than double to BD10 million.

The project has been struggling since 2008 (when it was hit with dramatic cost increases in building materials due to the real estate irrational exuberance - a particular cause was the Dubai delusion).  Then later the collapse in real estate prices slowed sales, reportedly caused some buyers to walk from their commitments.  Tight financing terms didn't help either.

Arcapita brought the project to market in December 2004 for some US$260 million.   It's a measure of its own financial condition that it is not bailing out the project to finish it.

2 comments:

Laocowboy2 said...

While there has been a lot of international attention on the well publicised real estate sector woes in Dubai, there are certainly lots of problems bubbling away in Bahrain - and these are bound to start coming to a head soon. And then we have the Northern Emirates in the UAE, some projects in Oman and what looks like a massive offices glut coming on line in Kuwait. Time for more bank provisions methinks.

Abu 'Arqala said...

Laocowboy2

Indeed.

Time for a chorus of the "Blue City" blues. Unless of course you hold Tranche A.