Filed under: Real Estate Developments
An article from Bloomberg on Santa Giulia, a luxury project near Milan contains what just might be my favorite quote ever on developments gone bust. James Rehlaender, managing director at European Investors Inc., says, "When prices started to peak, developers were like crack users and would use all the money that banks were throwing at them." Indeed, and it's as good an explanation as any for what has happened at Santa Giulia, a project that was to include luxury apartments designed by Norman Foster and boutiques from top Italian brands like Dolce & Gabbana as well as hotels, schools and a church that is now starting to look like yet another project that will never be completed.
Luigi Zunino, the Italian entrepreneur behind the project is now hoping to find someone to take over the two-billion-euro development. The ambitious project is currently just a sprawl of abandoned grounds with ditches and unpaved roads. Zunino's company Risanamento SpA, is said to have 2.6 billion euros in debt from buying offices and homes around the world. Now if Zunino needs a quick sale to make some ready cash it may not come so easy. Italy's real estate prices are starting to fall. If things continue along this path Risanamento could run out of cash within months, but banks are hoping not to have to foreclose on any property. Housing cooperatives have built 1,900 homes in a southern area of the complex but now those residents are finding that instead of living in part of a growing community of retailers and businesses they are in a mostly deserted area with an incomplete infrastructure.
At the end of last year Risanamento did sell another project in Sesto San Giovanni, near Milan, to Limitless LLC of Dubai for 475 million euros but the development must be reviewed and approved by local authorities before the deal goes through.