Drone aerial images of Ruby tower 1 of the Ruby Collection
Drone aerial images of Ruby tower 1 of the Ruby Collection

What caused Ruby developer’s collapse

SCORES of contracts in the first stage of collapsed Ralan Group's Ruby tower fell over before settlement, property records have revealed.

Despite boasting the tower had been sold out since 2015, Ralan Group is still registered owner of 54 of the completed building's 243 apartments, the last of which were due to settle in November.

It has emerged the Sydney-based developer, which went into administration on Tuesday, has retained more than 22 per cent of the apartments amid speculation their mostly-foreign buyers were unable to get loans.

Core Logic data shows while many cash buyers settled on their apartments in 2014 and 2015, the majority of those due to settle in November last year did not complete their purchases.

Reports emerged at the time that foreign buyers had been refused bank and private finance for Ruby sales, most of which were made to Chinese investors.

Owners in tower one have been told they have lost their guaranteed rental return of eight per cent, but that the apartments would continue to be managed while Ralan was in administration.

Meanwhile, 1189 buyers in four future towers at the site have been told most of their deposits were diverted and spent by the group, run by Welshman William O'Dwyer, and may not be recovered.

CONTRACTS CRASHING AS VALUATIONS FALL SHORT

Exterior view of the Ruby Collection and Paradise Resort in Surfers Paradise. Picture: Jerad Williams
Exterior view of the Ruby Collection and Paradise Resort in Surfers Paradise. Picture: Jerad Williams


Initial estimates from administrators Grant Thornton reveal Ralan companies owe half a billion dollars in debt to a range of creditors.

The administrators said they were considering selling Paradise Resort to another developer to complete the remaining towers, but could not say whether a new owner would honour existing contracts.

In a letter to off-the-plan purchasers in Ruby towers two, three and four, as well as neighbouring Sapphire and a Sydney project Orchid, the administrators revealed many of them had signed over their deposits to two other Ralan companies.

Drone aerial images of Ruby tower 1 of the Ruby Collection.
Drone aerial images of Ruby tower 1 of the Ruby Collection.

The letter said "the majority of purchasers" had entered side agreements with Ralan effectively granting Ralan use of the funds as unsecured loans and that there was a "significant deficiency" owed to purchasers and creditors.

"At this initial stage, we believe that the majority, if not all, of the deposits released to (the Ralan company) have been used to fund the expenses of the Group including payment of interest on unsecured loans," the letter said.

"The Administrators will be undertaking an investigation into the Group's financial position to establish how these funds have been used and whether any recoveries can be made in the future that will be available to pay you back."

Sydney-based developer Ralan Group has collapsed, potentially leaving hundreds of people out of work. Exterior view of the Paradise Resort in Surfers Paradise. Picture: Jerad Williams
Sydney-based developer Ralan Group has collapsed, potentially leaving hundreds of people out of work. Exterior view of the Paradise Resort in Surfers Paradise. Picture: Jerad Williams

The letter said the majority of Ruby purchasers had signed their deposits over to Ralan, but that some may be held in trust.

The administrators could not say whether the deposit value, usually about 10 per cent of the purchase price, would be applied to the sale total if the apartments were finished and the sales completed.

The group, which manages the Ruby Collection apartments on behalf of the owners and also operates neighbouring Paradise Resort, employs hundreds of Gold Coasters.

It is one of the Gold Coast's biggest landholders, and planned to spend $1.4 billion on its Ruby and Sapphire developments, which were due to launch by 2022.



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