A proposed golf course development in North Side is raising eyebrows about the project’s feasibility, the developer’s sales strategy and the ownership of the company behind it.
The Dubli Golf & Beach Resort concept is being marketed to potential land buyers in Europe, the Middle East and Asia, though not in Cayman. Dubli developer Crown Acquisitions Worldwide is one of two companies with ties to North West England that, over the past five years, have been buying and selling plots of raw land in Cayman to overseas residents at premium prices, along with promises of guaranteed returns on investments and interest-free financing. While they are distinct entities, Crown and Oasis Land Development have similar business strategies, share a history and encourage UK residents to invest their private pensions in Caymanian land.
The companies’ activities appear to meet the UK government’s definition of “land banking”. Crown has both a Cayman trade and business license, as well as a local companies control licence – exempting it from the 60 per cent Caymanian control requirement – while Oasis’ application for a trade and business licence is pending, according to the Department of Commerce and Investment.
Crown director Darryl Pickthall said his company owns about 300 to 400 acres in Cayman, spread out over all three islands. That includes 28.6 acres for Dubli, on Rum Point Drive near Grape Tree Point. Crown received planning permission in fall 2009 to build a 61-lot subdivision, and earlier this year to build a 14-unit apartment building and swimming pool.
While Crown’s marketing materials for Dubli promise the construction of a four-hole golf course, which appears on plans for the subdivision, the developer does not yet have permission to build a golf course, according to a Land and Survey Department planning officer.
Mr. Pickthall said Crown has found buyers for all 61 lots earmarked for houses. The 61 lots range in size from about 0.28 acres to 0.57 acres, with the smaller plots advertised for a sales price of £175,000 (or about CI$238,000). Local realtors and developers told the Compass the price seemed very high for unfilled, inland plots of that size and in that general area.
For the sake of comparison, a nearby lot of 0.65 acres – also unfilled, but including 100 feet of beachfront – is currently listed in CIREBA’s database for CI$153,000.
Mr. Pickthall said the prices for Dubli lots are justified by the amenities that will come with the development, specifically mentioning the private golf course, 154 feet of beach, a beach club and swimming pool, tennis courts and security gate. “We’re offering something unique to people and for that you have to pay a premium,” he said. “The Ritz-Carlton has condos going for $3, 4, 5, 6 million. They’re not worth $3 to 6 million, but because of all the amenities of the Ritz, then they are worth it.”
According to official records, Crown purchased the three parcels composing Dubli for a total of about CI$1.28 million. Crown paid CI$900,000 for the 27 acres containing the 61 house lots, and paid about CI$380,000 for the 1.6 acres with beachfront and the proposed apartment building.
Wanda Rollf of Hydes-Rollf Ltd. said her company is managing the infrastructure of the Dubli project, including installing underground utilities, constructing and paving the road, and clearing, de-mucking and bringing the land up to the planning requirement of 4 feet above sea level.
Ms Rollf said Crown has attracted people from all over the world to Cayman. Most investors were from the UK when Crown first started in Cayman, but recently she has seen clients from France and England, with investors from the US to visit shortly. She has also seen Crown clients from Saudi Arabia, she said.
In addition to its website – promising a guaranteed return on investment of 12 per cent in a year, and a potential return of 40 per cent in five years, Crown targets investors via exhibitions at shows in Europe, the Middle East and Asia. Mr. Pickthall did not wish to disclose further ways how Crown locates its clients. The company plans to market properties to Cayman residents in the future, he said.
Mr. Pickthall said only about 10 per cent of Crown’s clients are investing their private pension funds. He noted that UK individuals investing their private pension funds are not allowed to invest in residential concepts, and that the Cayman land plots are considered commercial concepts until the day that residential construction begins.
However, Mr. Pickthall did say that Crown has an agreement with the DubLi Network, who he said has bought 15 lots from Crown in order to move VPs from the US to Cayman, primarily for tax purposes. DubLi Network is part of Boca Raton-based MediaNet Group, specialising in “reverse auctions” conducted on its DubLi.com website. Specifically, the DubLi Network arm of the company is a network of independent salespeople who direct customers to the DubLi.com website. The salespeople are not regular salaried employees, but receive commissions for signing up new customers and for recruiting new independent salespeople.
According to information from the company’s website, the lots in the North Side development are being offered as prizes for the Network’s “top performers.” According to the site, the Dubli development will feature a nine-hole golf course.
When asked about the discrepancy over the size of the golf course, Mr. Pickthall said Crown does not have any control over what the Network puts on its website, but that his group is negotiating with adjacent landowners with the ultimate goal of perhaps having a full 18-hole golf course in the future.
Mr. Pickthall said he anticipates building model homes on the site in the next three to six months, and that his clients will be ready to build within the next 12 to 18 months. That concurs with time frames given by Ms Rollf. She said it will take about a year-and-a-half to prep the entire site for construction and then pave the roads.
In addition to selling land, Crown also promises building design plans to buyers, and offers to act as general contractor for clients who wish to build homes. Crown calls it a “house in a box.” The price for a 1,900 square foot, two bedroom house through Crown is about CI$353,000; the price for a 2,900 square foot, four bedroom house through Crown is about CI$609,000 – not including the cost of the land, government fees, site fill, driveway or pool.
Just down Rum Point Road, Crown also owns 13.6 acres north of Malporas Pond. In June, Crown received planning permission to build a 35-lot subdivision of single family homes.
On its website, Crown advertises five more developments, all on the Sister Islands. On Little Cayman, Crown features three subdivisions on the eastern part of the island. On Cayman Brac, Crown has two subdivisions on the central-west part of the island. The majority of the plots in those developments are listed as already sold. The advertised price is £60,000 (CI$81,600) per parcel in each of the developments, except for £40,000 (CI$54,400) parcels in one of the Little Cayman developments.
Like the Dubli development, the Sister Island subdivisions have roads but no buildings. Also like Dubli, the Sister Island plots are listed at premium prices. For example, CIREBA lists a 0.59 acre lot near Lakeside Estate (with its lots ranging from 0.24 to 0.40 acres) for CI$40,500.
Ms Rollf said infrastructure and road paving is complete in three of the subdivisions, while the other two are ready to be prepped for the construction of roads.
“Some people wonder how they could be so successful. Their success comes from helping people purchase land in ways that otherwise they would not be able to afford outright, such as a payment schedule of three to five years,” said Ms Rollf, who said she bought a piece of land from Crown in Little Cayman and is satisfied with her purchase.
Mr. Pickthall said the Dubli development is the largest and most comprehensive development his company has ever done. He said the team behind Crown has been developing investment properties over the past 20 to 30 years in places such as the UK, Dubai, Denmark and Spain. He said the company also owns 300 acres in Jamaica and a few hundred acres in Barbados. When asked for examples of previous developments that have been completed, he pointed to a nine-bedroom house on the Spanish island of Mallorca in the Mediterranean Sea. The house, which he says the company sold for €6 million, is now listed for sale – as a bank repossession – for €4.475 million.
Noemi Estrada, an independent realtor and CEO of Mallorca Realtors Exclusive Properties, said in her opinion the current list price is “very expensive” and gave several examples of what she called “much better properties” in the €4 million range.
Oasis CEO John Ball used to be involved with Crown, before leaving and starting Oasis in 2008. Mr. Ball also pointed to the nine-bedroom house in Mallorca as an example of previous overseas land development. In the Cayman, Oasis advertises property for sale in East End in Grand Cayman (The Royal Residence), on eight sites in Cayman Brac (with only two sites not sold out, according to the website) and two sites in Little Cayman (with only one site not sold out).
Mr. Ball said Oasis’ strategy is very similar to Crown’s, although Oasis does not have the “house in a box” concept, which Mr. Ball said he does not particularly like. He said Crown focuses more on Grand Cayman than Oasis does, though the two companies sometimes end up competing for clients at the same exhibitions, such as a recent one in Beijing. Mr. Ball’s company has several offices across the globe, but has land interests only in the Cayman Islands. Oasis is about three years behind Crown in terms of development, he said. Mr. Ball said his favourite island is Little Cayman and that he intends to build a company house there, perhaps in 2012.
Mr. Pickthall, on the other hand, said the main difference between Crown and Oasis is that the properties and services Crown offers are far superior to those offered by Oasis.
The contracting work in Cayman for Crown and Oasis is done by local companies. As in the case of Crown, Oasis properties do not currently have any residential structures on them.
“Most of our clients are buying on five-year payment plans, then they will make the decision whether to build. The problem we’ve got is the current economic climate. No one really wants to be building,” Mr. Ball said.
Unlike Crown, Oasis has a real estate agency representing it locally, and some properties are listed in the CIREBA database. Oasis’ agents are Cathy and Neil Williams of Williams2, part of RE/MAX Cayman Islands.
Mrs. Williams wanted to make it clear that she and her husband work exclusively for Oasis and not Crown. She said she has worked with Mr. Ball for about five years.
“They buy up large acreages of land, then subdivide that land, then sell that land to foreign investors,” she said.
Describing it as land banking, Mrs. Williams said Oasis targets the “mega wealthy” from all over the world, who are looking to add Caymanian land to their existing real estate portfolio. Mr. Ball, however, disputed the “mega wealthy” characterisation of his clients.
Mrs. Williams estimated that Oasis holds hundreds of acres in Cayman and credited the company with singlehandedly boosting the Sister Islands’ land market. Without Oasis buying property, the rural land would “just sit there”, she said.
“I have enjoyed a phenomenal, first-class relationship with their affiliates all over the world. They’re a fantastic company. They deliver on their promises. They have put infrastructure in place in both the Sister Islands, and they’re fantastic,” Mrs. Williams said.
Mr. Ball is a well-known businessman in the UK county of Merseyside, which contains the cities of Liverpool and Southport. Beginning in 2009, the homes and offices of Mr. Ball and his business partner were subject to an estimated 20 violent attacks, involving guns, arson and even a grenade, according to local media accounts. Mr. Ball said prosecutions in those cases are still lingering.
Additionally, in July 2009 a 20-year-old man hurled an axe at Mr. Ball, missing him, after the assailant lost his money in a business deal with Mr. Ball involving three plots of land in Cayman. “He couldn’t make the quarterly payments that he had signed the contract to make,” Mr. Ball said. “Then he turned up with an axe.”
Two of Mr. Ball’s companies – European Environmental Controls and Fireguard – have been accused by British media of pressuring elderly people to buy overpriced security systems and fire safety equipment. According to a local newspaper report, Mr. Ball was described on a BBC consumer show as “groundhog man” because of the number of times he had been investigated due to complaints about his business practices, and that Mr. Ball had been featured on an earlier form of the BBC show Watchdog as long ago as 1984.
Meanwhile, Jason Pickthall, who is Crown’s director of planning, is also a well-known Merseyside businessman. Jason Pickthall co-founded mobile phone retailer Phone People, which at one time had 125 store locations, according to a local newspaper. In spring 2000, Jason Pickthall was ranked 10th on The Sunday Times Rich List of young millionaires, with an estimated worth of £50 million. By fall 2001, he had sold his stake in the company and filed for bankruptcy.
FSA on land banking
The UK’s Financial Services Authority has pages on its website dedicated to warnings about land banking schemes. According to FSA’s site, “Land banking companies divide land into smaller plots to sell it to investors on the basis that once it is available for development it will soar in value.”
Many land banking companies contact customers by “cold-calling” them out of the blue, but also reach potential clients by email, post, word of mouth, or at seminars or exhibitions, according to the site: “Investors are told they will make big profits on small plots of land once planning permission is granted or development started.”
According to an email from Crown personal investment advisor Paul Halsall, “While land suitable for development can cost up to 40 per cent of the price of a new property elsewhere in the world, our residential building plots in the Cayman Islands cost as little as 5 per cent of the potential re-sale price of a completed property. This significant extra profit potential makes Cayman Islands land investment one of the most potentially lucrative strategies in the current market.”
According to FSA’s site, “Just because the person promoting or operating the scheme says it is guaranteed the land will be developed does not necessarily mean it will be.”
The FSA estimates that land banking schemes have cost UK consumers as much as £200 million. The FSA also notes that legitimate land banking companies do exist.
The FSA does not regulate the sale of land, but it does regulate “collective investment schemes”. Companies must be authorised by FSA to promote or operate them in the UK. According to FSA, the characteristics of a “collective investment scheme” include: “investors do not have day-to-day control over managing their plot”; “the scheme involves pooling investor funds”; and “the operator is responsible for managing the scheme as a whole”.
According to the site, “It is possible to sell plots of land without the scheme being a CIS. So, many land banking schemes are set up to avoid the characteristics of a CIS – at least on paper.”
Neither Crown nor Oasis, nor their directors, is listed as an approved “collective investment scheme” in the FSA register – however, neither Crown nor Oasis, nor their directors, appears on the FSA’s list of unauthorised firms/individuals known to be conducting regulated activities.
As of press time, the Cayman Islands Monetary Authority did not respond to a query of whether the local government regulates land banking or collective land banking, or if Crown’s or Oasis’ activities fall within the government’s regulatory scope.