The Boss Hotel Suites, Klang - another one bites the dust - condominium project failing big time 🏨💀💀💀

This is probably old news (2015) but it's quite rare today with all the housing acts (HDA) to protect home buyers around that a property project can fail so big time.

This 2008 project was supposed to be an iconic structure in Klang, 322 units of residential and 66 units of commercial units, its design was quite unique even on today's standards. The project was set to be the tallest building in Klang but now it can get the title of the tallest abandoned building in Klang. Location wide is on the main road at Klang and very visible.

Priced from RM250k to RM900k, the project had all the goodies to attract any investors namely:

👉GRR 7.5% aka Guaranteed Rental Returns
👉DIBS aka Developer Interest Bearing Scheme
👉Nice artist impression, unique design

👉Managed by a hotel group

The RM800K, 900K units are commercial units (shops) below the residential building. Most of the buyers were not from Klang but from other suburban areas like Petaling Jaya and Subang.

The developer (Hotwer Development) mentioned that the investors/ purchasers can leaseback their units to a hotel operator to get the guaranteed returns promised. During the project launch, famous Hong Kong TVB stars Ron Ng and Kate Tsui were roped in to do the ribbon cutting, creating the image of the project's high end status.

The Boss project was abandoned at almost completion stage and left all the investors in the dark. Banks already released the progressive payment to the developer (Hotwer) ; therefore investors still need to service the loan as the progressive payment is already paid to the developer. The loan relationship however is between the bank and the borrower/investor and as such say if the bank released RM100,000 to the developer, the investor has to keep servicing the loan amount was was already paid out regardless of whether the project was completed or not.

Sad but true. However, honestly, I still think this project can still be saved. It's a matter of how much the investor is willing to sacrifice.

For a white knight to come in to just save the project like this is quite difficult without investors footing additional monies. The only way to save this project would probably be to gather all investors and then get a white knight developer to take on the remaining portions of the project but the investors have to foot out some money for the revival of the project. Time is of the essence now, the longer it is dragged, the longer it will be abandoned and less attractive for a white knight developer to rescue the project. Costs of raw material also will go up as time passes making the cost to save the project go higher and higher.

Also, avoid GRR (guaranteed rental returns) projects like a plague. Typically, GRR projects are overpriced products. The developer usually has already markup the property sales price with the guarantee rental value over the agreed years and uses the markup money to pay back the investor/buyer. There's no different from taking money from 1 pocket and putting it into another pocket. In other words, the developer already guaranteed himself rather than the buyer because they already pre take the rentals upfront and pay back the investor/buyer in installments.

Finally it was found that this was the 1st property development by the developer who was previously in the furniture business. Therefore the risk of failure is much higher.