Can real estate developers downgrade your property? From Hotel Apartments to Standard Residential!





Can developers make changes to an SPA once they have signed it with property buyers? In other words, can they make changes to the labelling of a property from ‘serviced apartment’ to ‘residential’ midway through a project?
 
In principle, developers shall not ask investors to give away their rights to receiving a different type of property to the one that they paid for and they were promised to receive. Especially if it is a downgrade from “hotel apartments” to plain “Residential Apartments”.
Only inexperienced investors would accept such a proposal under the pressure of developers delaying handover. I anticipate a difference of at least 15% to 20% in value between “Hotel Apartments” and a simple “Furnished Apartments”. This what investors can lose by accepting the downgrade. A fair request from developers would be to offer investors a compensation of 15% to 20% of the original purchase price, in exchange for the investors approval to accept to receive a residential apartment and not a hotel apartment. Developers charged investors high premiums in line with their promises to deliver hotel apartments and not simply residential apartments.

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