Matt Burden, an executive at a relocation company, thought his investment in a villa at Nexus Residence in the eastern Malaysian port city of Kota Kinabalu in 2007 was a good bet until it turned sour last year.
The 'lease-back' purchasing scheme he chose guaranteed he would receive net rental of at least HK$170,000 a year, or 7 per cent of the purchase price for the first five years from the developer Karambunai Corp Bhd (KCB).
'Owners that signed the sub-lease agreements were also entitled to use the villa themselves for 20 days a year at no charge if they booked their stay three months in advance,' he said.
But last year the rental payments promised by the developer began drying up. 'Now many buyers are facing severe financial issues and some are being forced to walk away from their investment. It is very worrying,' he said.
Another owner, Julian Hyland, said the developer owed him US$31,000 in unpaid rental for his 1,275 square foot villa with a private pool.
The developer had not yet transferred land titles to individual owners, added Hyland, who bought his villa in 2007. 'Without individual land titles we don't have control of the properties. We cannot change the management company and in the meantime the maintenance of the property is deteriorating.'