The FINANCIAL — Located near the New Boulevard on the coastline in Batumi, Magnolia is the largest residential complex in Georgia with 860 apartments and 79 commercial spaces, of which construction has recently been finished – but that doesn’t leave its homeowners happy at all.
The FINANCIAL — Located near the New Boulevard on the coastline in Batumi, Magnolia is the largest residential complex in Georgia with 860 apartments and 79 commercial spaces, of which construction has recently been finished – but that doesn’t leave its homeowners happy at all.
Center Point Group, one of the largest property developers of the Georgian pre-crises real estate market which later went broke, started building this complex – initially named Tetri Magnolia – in 2005 with its planned date of completion January 2008. As the company went bankrupt, Dexus Group, another developer, took over all its assets and promised to finish its 25 development projects within three years. Some of this has happened recently, as with Magnolia, but this is not the end of the story.
Now as the apartments are finished after four years of uncompensated waiting and the time for registering the property has come – many months after the official opening ceremony on Sep 24, 2011 – homeowners have discovered that their contract was changed, disallowing them to register a property unless they paid additional VAT of USD 5,000, about which nothing was mentioned in their original contracts with “Center Point Group”. In addition, Dexus, via Property Invest Company, is insisting homeowners pay GEL 1,500 (apprx. USD 900) so-called “abonent” fee per apartment.
N. Lebedeva, who lives in The U.S. with her Georgian-born husband, is one of the worst victims of Dexus Group’s manipulations. As she told The FINANCIAL, “We were notified about the additional contract just a month or so ago, when with the construction finally completed we wanted to close the purchase by registering the property to our name. It feels like extortion, and we hate to think that laws can be violated in Georgia. But why otherwise would they force a new contract that has no legal grounds whatsoever on investors?”
Lebedeva’s case is the worst because she owns three studio apartments looking over the sea and unless the developer admits that the new contract is unlawful she will have to pay around USD 20,000 plus expenses to fix the interior walls, although according to her contract with Center Point it had to be done by the property developer.
Mrs Lebedeva is a librarian and her husband is a retired biologist; they wanted to use the property for vacation/retirement living and give it to their daughter and grandchildren as inheritance, but as they claim without proper ownership they won’t be able to do that, and also pay for utilities.
“According to our estimation, Dexus/Property Invest could gain some 4-5 million USD just from apartments’ VAT,” claims Lebedeva.
Dexus Group LLC management’s response to The FINANCIAL’s inquiry on why they are charging homeowners additional VAT together with registration fees was the following: “Due to the crisis situation on the real estate market, we are forced to make homeowners pay VAT (18%). If they don’t pay the amount by the end of 2012, we will not give them the right to register a property, they will only be factual owners of the apartments – not able to sell the property”.
Homeowners have already become familiar with such a response from the company’s management.
“We were puzzled by the manipulations of the company. When we asked them to give us documentation showing who owned Magnolia they came out with the following response: ‘Center Point Group gave Dexus the right to rehabilitate the building although the property after all belongs to another company called Property Invest’. The thing is, all these three companies are in one building, share the same email addresses with the domain dexus.ge and communicate in the same language,’’ said Zurab Tsikhiseli, the man to whom Lebedeva gave power of attorney, to be able to act in her name.
In addition, as Tsikhiseli claims having seen the original documents on the official Registry Office website www.napr.gov.ge, “Property Invest has no right to register owners as well as individual registrations for Magnolia flats. Based on the property records database, some 15 owners already paid VAT – but was their registration valid?” queries Tsikhiseli.
As Dexus Development management claims, “The current owner of Center Point Group still remains Maya Rcheulishvili, whilst that of Property Invest is her husband Vakhtang Rcheulishvili. Dexus Development, as such, is owned by Giorgi Kananashvili, Irakli Kilauridze and Ivane Tsaguria,” all of whom, as many believe, are backed by Rusudan Kervalishvili, sister of Maya Rcheulishvili, currently Member of Parliament since 2008 whilst from 1999 till 2008 was managing the company Center Point Group together with her sister.
Despite Dexus Development’s ambitious plan to complete construction of 25 buildings within the period of 2010-2013 started by Center Point Group, the majority of which is centred in Tbilisi, only three residential complexes have been finished, those of Magnolia (in Batumi), Mioni (in Dighomi) and White House of Samgori. Whilst out of commercial spaces only two have been completed, namely Chavchavadze Corner and Khosharauli Abkhazia, that’s according to information given on Dexus’s newly updated website – www.dexus.ge.
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