More Due Diligence Needed on Caribbean CBI Developers: Mohammed Asaria on The Mobility Standard Podcast

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Our guest this week on the Mobility Standard podcast was Mohammed Asaria of Range Developments, the Caribbean CBI market’s leading property developer. The agenda during this episode included

• a progress report from his third project in the region, the Six Senses in Grenada;
• the scourge of illegal CBI discounting and how it’s being dealt with;
• why most developers don’t have what it takes to finish their projects; and
• where Range Developments are planning their next projects.

Making up for time lost to the pandemic

The pandemic disruptions to work on the site notwithstanding, Asaria explains, the Six Senses is on track for completion in Q1 2023. But it hasn’t been a walk in the park either:

“It’s been quite an experience working and mobilizing through Corona,” he notes. “Especially in a country where a lot of things have to be procured externally, both in terms of labor and supplies. To give you an example; we have to import 200,000 items from 5,000 different suppliers. That’s a logistical nightmare without Corona and, as you can imagine, Corona and the supply-chain crisis haven’t made that process easier.”

Though the pandemic brought short-term disruptions to construction progress, it hasn’t dampened investor interest:

“Sales have been going well,” he says, revealing also that the project’s first phase is “close to 90% sold” and that he’ll be announcing the second phase of the development within the next several weeks. In this podcast episode, he discloses where in the Caribbean Range Developments are planning their next resort.

Developing in the Caribbean: “Not for the faint-hearted”

Asaria postulates that one of the reasons so many CBI-funded projects in the region go unfinished is that newcomers invariably underestimate the complexity of bringing projects to completion, an observation he also outlined in further detail in his opinion piece of last year – The 8 Iron-Clad Rules for Investors Who Don’t Want to Lose Money on Caribbean CBI Hotel Projects.

“You have to be very resilient and you have to have very thick skin to get to the end – successfully – on a development. […] It’s not for the faint-hearted.”

Many developers, he points out, take an approach by which they start out under-capitalized, building only as and when they raise funds. That, suggests Asaria, is a recipe for failure.

“Millions of dollars have to be spent on design to make sure the end product is viable and sustainable and makes economic sense. […] We invest a significant amount of our own money before we even think about raising money from citizenship by investment. That’s the only way you can be successful in development. You can’t just put up a sign outside your door saying ‘CBI for sale’ and then you sell one citizenship and you buy some concrete, you sell another one and buy some more concrete. The cost of a good piece of land, the cots of design; we’re talking tens of millions of dollars before we’ve even started. And unless someone is going to be focused and take an institutional approach and is well-capitalized, they’re not going to get to the finish line.”

Questioned as to how the blight of half-finished projects, a recurring problem among the regions CBI-jurisdictions, might be prevented in the future, Asaria indicates it’s a matter of being more selective in the project approval process.

“There needs to be more due diligence on the individuals who are behind those projects. I’m not saying they come to the table with bad intent but their skill-set needs to be ‘dilligenced’ a lot more. Do they know how to build? Have they built before?”

On blacklisting as a means of preventing ghost developments, Asaria says it “makes a lot of sense. I think it’s a great approach.[…] You see what happens when things go wrong, like in Cyprus. So, I’m glad we have a naming and shaming approach so that we don’t have a repeat of the Cypriot example in the remaining CBI countries.”

Listen to the full episode in the player above or follow The Mobility Standard on Spotify, Apple Podcasts, and most other podcast platforms.