Paradise turns sour in Fiji and real estate projects face finance problems

Property investors in luxury projects on the tropical island of Fiji are starting to become concerned as problems begin to emerge over finance.

They thought they were buying into paradise but three major developments have hit trouble due to the global economic downturn.

The Strategic Finance-backed Fiji Beach Resort & Spa managed by Hilton, the Bridgecorp-funded mammoth Momi Bay and the Strategic-funded development parcel known as Denarau Land South are facing challenging problems.

All are located on Denarau Island, which has a string of international resorts and hotels and the redeveloped Port Denarau area with its shops and restaurants which is regarded as the gateway to Fiji’s beautiful Mamanuca and Yasawa island groups.

The global financial crisis, a political coup, disastrous floods, fierce cyclones, and fewer tourists have had an impact on investments. Developers are struggling and a major row has broken out over more than millions of dollars owed to villa owners.

Bridgecorp and Strategic are calling in loans on $200 million of properties and attempts to sell Momi Bay have been unsuccessful so far. Then New Zealand developer Nevill Mahon, who is in the middle of building another 90 villas at the Fiji Beach resort, wrote to investors warning that the business could be heading for receivership as he cannot secure the money needed to finish the building work.

Although the resort continues to operate its other villas, investors who have so far put millions into the expansion are concerned.

Some owners have formed an association to try to ensure that the resort continues to provide a high level of service to guests and oversee a structured management agreement. ‘We are confident that the Fiji Beach Resort & Spa will be completed as originally intended and continue to provide holidaymakers with the ultimate Fijian experience,’ said a spokesman for the Villa Owners Association.

Mahon’s proposals to pay back loans have been rejected. He says that he wants to complete the villas, bistro and swimming pools but the work cannot be completed at present.

Some of the investors in the existing villas are well known personalities including former All Blacks rugby players, media and communications people, doctors, and businessmen. Although they have made money from their investment in the first few years of ownership income form last year is ‘locked’ because of the finance problems.

A separate group has been formed to represent their interests. The Villa Owners’ Representative Group said its aim is to sort out the payment problems for existing owners. ‘Our focus is to gain payment of money owed to villa owners under their existing agreements and to work with the developer to achieve the earliest most complete and high quality finish to the resort facilities and keep it operating to its current high levels of occupancy and service,’ a spokesman said.


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