Prime Kapital continues to build trust by moving all client deposits into a protected account structure
In an unprecedented response to prevailing market uncertainty caused by the COVID-19 pandemic, real estate developer Prime Kapital announced that it is implementing robust measures to guarantee clients` deposits by placing the funds advanced by clients in a separate fiduciary clients’ account. This unprecedented voluntary initiative means that all those who wish to purchase a home from Prime Kapital will have their deposits fully secured.
“We acknowledge that buyers and developers alike currently find themselves in an extraordinary period. Buyers will very likely recall the 2008 financial crisis and the losses suffered by some prospective residential property purchasers who were unable to recover their deposits because of developers that ultimately went bankrupt. While buyers do in fact already benefit from our market-leading low minimum down-payment requirements, we realize that for many, these funds are part of their nest eggs and life savings and that more should be done to protect clients. At Prime Kapital, we are a self – funded business with no need to access clients’ deposits for purposes of funding our development and construction costs, instead deposits are an internal measure to ensure that clients are committed to the transaction. In this context, the COVID-19 pandemic highlights what we consider as a need for residential development sales processes to separate clients’ deposits from developers’ projects risks. Prime Kapital is responding to this without delay and believe this will ultimately reinforce our position as a leading, self-funded developer with a long-term view to build quality and sustainable communities”, says Maggie Kitshoff, Residential & Office Managing Director Prime Kapital.
All existing and future deposits, paid for the purpose of securing units, will be placed in a separate protected ‘Fiduciary Account’. This means that the developer has no access whatsoever to clients’ deposits until the unit is completed and delivered to the client. This eliminates the risk for clients of losing their deposits should the developer default on its promise to deliver to them the home they have contracted and paid for, as the advance payments are not used to pay for the construction costs of the development and would automatically be returned from the Fiduciary Account in case the delivery does not take place. Fiduciary accounts will be opened with reputable banks and managed separately with independent oversight.
“At Prime Kapital, we are receptive to client requirements and are constantly looking for ways to improve our processes with a continued focus on product quality and innovation. Some developers may argue that standard pre-sale contracts already provide deposit protection – however, our experience is that, on close inspection, buyers are in reality exposed to developers’ financial health and in addition contracts have “fine print” that links recoverability to a number of conditions outside of their control. Prime Kapital’s Fiduciary Account, on the other hand, has been developed with the specific objective of providing protection on an open and transparent basis, through a complete separation of funds and risks. There is a spectrum of risk associated with deposit-taking activity and buyers should be informed. We know, for example, of a common practice among certain developers to offer aggressive pricing discounts in exchange for large deposits – effectively in a bid to secure access to clients’ money as part of their development finance. This means that clients are shouldering the development risk and the developer has nothing to lose if things go wrong and the project fails. In our view, buyers rarely have any visibility on the intricate finances of a developer and should insist on appropriate guarantees in exchange for their down payments,” says Maggie Kitshoff.
Prime Kapital has released to date two large residential projects in Bucharest, Avalon Estate and Marmura Residence.
Avalon Estate is in the northern area of Bucharest and offers low density living inside a gated community concept. The development offers in addition to well-designed villas, townhouses and apartments in several typologies and layouts, a large central green park, an exclusive club house with a natural pool, several functional amenities and support services. With a total of 746 units the development has attracted a lot of interest and a second phase of units will be released for sale in due course. The building permit for the entire project has been obtained and the construction start is expected to be announced in the coming period.
Marmura Residence, located at Jiului subway station, close to the new office hubs in the northern area of Bucharest, offers 465 studios, 2, 3 and 4-room apartments, duplexes and 509 underground parking spaces. Developed around the concept of an integrated community, Marmura Residence covers an area of 1.5 hectares and comprises 5,000 square meters of green spaces and generous community terraces, 1,700 square meters of retail spaces, services, and an exclusive recreation area for residents. Construction works on the basements are currently under way and will reach level zero as soon as July.
About Prime Kapital
Prime Kapital is a well known developer, investor and operator, active in Central and Eastern Europe. The founders of the business have been active on the real estate market in Romania and in the region for more than a decade and have an unparalleled reputation for the long-term quality and sustainability of their development projects. Prime Kapital has a broad presence on the Romanian market and is vertically integrated with a team of more than 200 real estate specialists, combining multi-disciplinary skills and covering the entire value chain, specific to real estate developments, from the acquisition, design and construction of projects to rental, sale and administration of property.
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