One of Thailand’s ritziest property developments, Istana, which appeared to be going the same way as the now abandoned Puravana and Barama Bay projects, is being pulled back from the brink, its new Managing Director, Michael Brereton, says.
When Istana was launched on a 61-rai hillside site between Nai Thon Beach and the Andaman White Sands Beach resort, on the northwest coast of Phuket, the developers were offering 19 luxury homes ranging in price from US$4.25 million up to almost US$9 million (THB 128 million to THB 270 million).
It was launched off-plan and almost immediately nine buyers leaped in.
The developer is Prism Estates, the vehicle for the two main investors, Guy Greville, the ninth Earl of Warwick and ninth Earl Brooke, and Australian “lawyer to the stars” Michael Brereton. The site for Istana was bought in 2008 and the project was managed by Briton Richard “Dickie” Shearer.
In an interview published 18 months ago in Property Report Asia, the Earl and Shearer explained the rationale behind the decision to build Istana (Malay for “Royal Palace”).
“We felt there was a lot of money being spent on houses here already but we didn’t always see the value. So we set about creating something of value. Something that would not only appreciate as an investment, but would further the frontier of luxury on this already luxurious island.”
The target markets were Singapore and Hong Kong, they said.
People were very impressed with the plans for the development and with architect Gary Fell’s designs. Istana received full-page coverage in Hong Kong’s biggest English language paper, the South China Morning Post, and was written up in glowing terms in local papers in Phuket and magazines such as International Homes and the Robb Report.
In May last year Istana won Best Development (Multiple Units) Asia Pacific and Best Architecture Multiple Residence Asia Pacific, as well as three Thailand awards, in the Bloomberg TV/Google International Property Awards. Prism’s Sales Director, Richie Cohen, was pictured holding the awards, grinning broadly at the award ceremony held in Shanghai.
The following month Prism announced that a six-bedroom villa had been “sold” for US$6 million (THB 180 million).
But that was then.
Around the beginning of this year Mr Cohen left the company, taking his grin with him. So did Duane Lennie, marketing consultant, who told The Phuket News he is owed THB 500,000.
Investors, too, were none too happy about the value of their investments in Istana, especially after the main contractor, Hat Yai Nanthakorn, stopped work. A spokesperson for Hat Yai Nanthakorn, speaking on condition of anonymity, confirmed to The Phuket News that it is owed money, but declined to say how much.
Two of the buyers are suing for the return of their money. Their lawyer, Gordon Oldham of Hong Kong law company Oldham, Li & Nie, confirmed that he had sent out a letter to interested parties, alleging that Prism/Shearer had issued cheques to his clients totalling US$3 million (THB 90 million), which had bounced – a crime in Thailand.
The Prism Estates office disappeared from Plaza del Mar in Cherng Talay, and the telephone number on the Istana website is “not assigned”. The last construction update on the Istana website is dated January 2011. Tweets on Istana’s Twitter account are rather more recent, and appear to blame Prism’s woes on the Islamic Bank of Thailand.
Mr Shearer’s business card gives both his office number in Hong Kong and his Hong Kong mobile number. Both are currently “unassigned”, though he is understood to be still in Hong Kong.
Rumours have been flying in property circles, and on July 4 Istana’s woes went public when journalist Andrew Drummond aired them in his blog, painting a grim picture of serious mismanagement.
But, Mr Brereton told The Phuket News on Monday (July 9), as of April 29, he is in charge and Dickie Shearer is history. “I became a director on April 29 and [Shearer] very judiciously did not stand for re-election.”
The Phuket News understands that a major hurdle – non-payment of interest on a credit line from the Islamic Bank of Thailand – has been rectified.
Mr Brereton confirmed on Monday that the relationship with the bank has been repaired. “We’re not relying on the [Islamic] bank in the same way,” he added, declining to go into further detail.
“We’re turning the project around very rapidly,” he said.
The true test of how successful the turnaround has been will be the sight of the main contractor back on site. Mr Brereton says it will be very soon.
“I can’t tell you at the moment which contractor we will be using – we’re in final negotiations this week – but construction will restart before August 1.”
This story was first published by The Phuket News and is reproduced as part of an editorial partnership agreement between PropertyGuru and The Phuket News.
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