Luxury Real Estate News – Credit Crunch Does Dallas, Myrtle Beach Developer Halves Staff, Toll Brothers Take More Write Downs, New Zealand Developer Drops Mega Hotel Project and Honda Pull Out of Formula One

Marina Terrace, Lake Wanaka is no more

Several projects in downtown Dallas have been canceled or work has stopped mid-flow as the credit crisis arrives in Dallas with a bang. Prescott Realty Group stopped work on the 22-storey “Heritage at the Stoneleigh,” condominium tower in Uptown near Maple Avenue when financing dried up part way through the project. Hillwood, the developer at The Victory Park project, a 43-story hotel and residential tower has also stopped work, and a partially built parking garage and wooden construction fencing are all that remain. Source – Dallas News

Burroughs & Chapin Co. Inc., one of the oldest real estate developers in Myrtle Beach, has warned its shareholders it will lose money, not pay dividends and put major real estate projects on hold in 2009. In a letter to shareholders last month, the company said its revenue from real estate sales is down “significantly,” its work force has been cut by 50% and it is looking to sell more of its businesses, real estate and other assets. Source – Myrtle Beach Online

Luxury real estate developers, Toll Brothers Inc, again took large write-downs and posted losses totaling $78.8 million for the quarter ended Oct 31 and $175.9 million in pretax write downs. Chief executive Robert Toll is still confident the firm will weather the financial storm, although he was not prepared to make predictions about next year’s possible earnings (or losses.) Source – Wall Street Journal.

One of New Zealand’s major luxury home developers, Infinity Ltd has pulled out of developing a $100 million luxury lakefront hotel on Lake Wanaka and placed the property up for sale. After nine years in court fighting environmentalists, permission for the 182-room luxury hotel complex was finally given earlier this year. Bad timing. Infinity plan to concentrate on their core business – master planned residential communities. Source – Otago Daily Times

Honda F1 2008

In other, more shocking news that is completely un-related to real estate, Honda have pulled out of Formula One Racing. Although this is an excuse to add a photo of a Formula One car, this move does rather show how far things have got, not just in real estate, but all other industries. When one of the major players gets to the point that entering a Formula One team is prohibitively expensive, it is clear there is something wrong. Honda spent €200 million in 2008, and managed a dismal ninth place in the championship. This move will undoubtedly bring a huge sigh of relief from BMW and Toyota, both of whom are suffering financially at the moment, and I suspect is the death-knell for Formula One in its current incarnation. No bad thing in my estimation. Things have got so bad in Germany’s automobile market that the government is seriously considering interest free loans to citizens to buy cars.

In the long run, the current situation should be good for all concerned. Real estate prices, along with car prices will return to a more realistic level, the surviving developers and car makers will come out the other side meaner, leaner and more customer-focused (except maybe the big 3 US makers). As and when……