Bust Developers

[2buyornot2buy]

I was reading a thread on the main forum (How Many Property Companies Are Effectively Bust?) about property companies with houses on the books for 5 year and the price increasing every year.

I have been looking recently at some apartments in the bt9 area. There seems to be lots of apartment in the dansfort, notting hill, and the elm developments that have been unsold for years. I’ve no idea how it works but could the situation be similar to the above thread? Are all these developers effectively bankrupt if they lower the prices? Are these priced so high for the balance sheet?

Are developers through out the country in a similar situation? What do they expect to happen?

[Mrs Bear]

I was reading a thread on the main forum (How Many Property Companies Are Effectively Bust?) about property companies with houses on the books for 5 year and the price increasing every year.

I have been looking recently at some apartments in the bt9 area. There seems to be lots of apartment in the dansfort, notting hill, and the elm developments that have been unsold for years. I’ve no idea how it works but could the situation be similar to the above thread? Are all these developers effectively bankrupt if they lower the prices? Are these priced so high for the balance sheet?

Are developers through out the country in a similar situation? What do they expect to happen?

When I saw 'bust developers' I thought you were about to expose some scam promising 38DD for only £19.99

[2buyornot2buy]

When I saw 'bust developers' I thought you were about to expose some scam promising 38DD for only £19.99

Lol maybe not the best choice of topic title. You have to grab their attention.

[Reluctant Heretic]

Lol maybe not the best choice of topic title. You have to grab their attention.

I was just trying to follow the economics thread, (RedKharma and co) a highbrow debate based on a WTIC chart disintegrated into an exchange of dodgy porn videos - check out that clogg dancing! I think it should be re-titled 'the high testosterone thread'.

I thought that the double entendre on 'bust developers' was inspired - a keen niche market - speaking woman to woman that is.

On a more serious note - the bank balance sheet/residential and commercial property asset issue seems to be an important one that is not given a great deal of direct attention in the press. I live in Truro, a town/city that has grown rapidly over past 10 years and possibly one of the few places where new build development was surging ahead through last year. It was weird, in Dec/Jan one of the local developers put up their prices by 10% and the next thing I heard they had gone bust and their nasty, cheaply-built, rabbit hutches were going for auction - at the same stupid prices! (I believe)

(The Spires, Tregloweth)

[BelfastVI]

Whilst not an account but someone who spends far too much time in their company I have to say the value of un-sold stock is not a balance sheet item. It will only appear as a WIP (Work in Progress) figure. The WIP figure is not the anticipated selling price of the properties but the cost expended on these buildings, many of which are part build.The cost for the land underneath each plot will, depending on the accountancy practice of the company, appear at cost. The two of these together may, in some cased be above what they could reasonably expect to recover on sale. In that case the auditor could not sign off on the accounts with making a provision or Wright-down in the accounts.

'Effectively bankrupted' is loosing its meaning. You are effectively bankrupted if you are unable to pay your creditors when they fall due. All loans now, and for some time are 'on demand loans'. All overdrafts are and I'd say if you read all the small print on your mortgages you would find that bar the government stepping in, as they did down south they are also 'on demand'. I would say there are only the elite, or those very few who survive on little or no credit who could settle all their creditor demands if they all fell due tomorrow. There are very few companies out there who could do likewise and I would say there are very few countries who could do likewise. Therefore The vast majority of individuals, companies and for that matter countries could be termed effectively bankrupted. During a recession that's the way it works. As was seen in the courts in Dublin - what value could you place on a land bank? Very little if you are forced to sell it but substantially more if you have the where with to develop it out and retire the debt. I don't know why developers keep the prices at boom levels. Have the developments you quoted dropped nothing from the boom?

If its a new development with few if any sold then yes they are in difficulties as the land was probably 'boom priced land' If the development is mature and the majority are sold then first the land is probably 'pre boom land'and secondly they probably have the debt repaid. Two entirely different situations.