By Martin Kelly, Editor, Travel Trends
THE Mount Hotham dream has turned sour with up to 17 ‘pre-sold’ buyers refusing to settle on land they bought at boom time prices in the Victorian ski resort, while people who agreed to pay up to $7 million for luxury ‘Sky Homes’ have no idea when the project will proceed.
That’s because no-one does, including Mount Hotham Resort Management Board Chairman Geoff Provis, who this week admitted that the $500 million redevelopment proposed by the failed MFS Group was on indefinite hold.
“I have absolute confidence it will take place but I’m not sure when,” he said. “While we’re in the midst of the Global Financial Crisis, it’s going to be extremely difficult for anyone to raise the sort of funds required.”
Which means that investors who bought into Freehold 1775 for up to $808,000 and the luxury Bale Mt Hotham ‘Sky Homes’ developments appear to have been left stranded, financially committed to a vision that may never materialise.
But some are fighting back and the issue is turning into a festering sore for current owner Living and Leisure Australia, which emerged from the wreckage of MFS. It is controlled by interests associated with James Packer.
LLA, which also owns nearby Falls Creek, has just revealed that most of those alpine dreamers who bought into Freehold 1775 – “the absolute beachfront of the alps” – are declining to settle on land in some cases estimated to be worth 30% less than they paid.
In other words they either can’t or won’t pay, despite LLA pursuing “all avenues available” to effect settlement.
“It remains uncertain at this time how many of the sales can be settled and it what time frame,” the company said in a statement.
Despite numerous queries, LLA refused to be specific but did not deny local estimates that just three of the 20 blocks, which cost from $595,000, have settled.
Several local agents including John Castran from JH Castran said some of the cheaper blocks at Freehold 1775 would probably now be worth around $400,000, although the market has not yet been fully tested.
It’s the latest chapter in the drama that’s been unravelling since MFS unveiled a $500 million master plan for Mt Hotham in 2006 it devised with joint venture partner Ray Group.
At the time, MFS said Mount Hotham was “going to rival the uber destinations of North America and Europe” and bring “style and luxury levels never before seen on the Australian Alps”.
Dubbed ‘New Hotham’, the master plan involved a complex land swap with the Resort Management Board in return for a major road diversion and associated infrastructure, plus an integrated resort of complex more than 400 apartments.
The partners also sub-divided and sold 137 blocks further down the mountain at Dinner Plain in the smartly branded DP Village for around $45 million, including a display home designed by Giovanni D’Ambrosio for $2 million.
Flush with their success at DP Village, MFS and Ray Group turned their attention to marketing Freehold 1775 and the 41 ‘Sky Homes’ in Bale Mt Hotham, centrepiece of the resort redevelopment.
“It was one hell of a marketing campaign – totally ego-centric – and buyers came from all four corners of Australia, high net worth individuals and some who still are,” Mr Castran said
It was all sizzle and gloss. Bale Mt Hotham prices started at $2 million, soaring to $7 million for the penthouse, fittingly bought by failed investment tsar Peter Berlowitz, who went out of business owing investors $35 million.
The ‘New Hotham’ vision also began disintegrating.
First MFS bought out the Ray Group following the tragic death of company founder Brian Ray and his wife Kathy in a plane crash near the resort, preceding the collapse of MFS in early 2008.
Now a group of overly optimistic investors are paying the price, including more than a dozen people who put deposits on the Bale Mt Hotham ‘Sky Homes’.
Their money is being held in trust for an unspecified period by LLA even though it cannot say when the development will proceed.
It hardly seems fair yet despite all this, Geoff Provis maintained that the Resort Management Board made the right decision at the time to partner with MFS.
“At the end of the day no-one else had the vision and preparedness to do something like this in the mountains,” he said
“The Memorandum of Understanding was signed, we had a Heads of Agreement – it was all going to happen, then the balloon went up, and MFS went phut … the world has just changed.”
Too bad for those who bought the dram but ended up with the reality.
Travel Trends: May 22, 2009