If someone has to drop the asking price of their house from $85 million to $72 million, should we feel sorry for them? That’s what has happened to poor Mohamed Hadid, who is best known for building Ritz-Carlton hotels in the 1980s. If you’re in the market for a 48,000-square-foot mansion, here’s the listing.

While much of the press attention regarding the U.S. property bubble has been about subprime loads and foreclosures in the rust belt, the most breathtaking declines have been in California and Florida—the two states that got the most inflated to start with. Many buyers who got in on their ideal gated community around a golf course are finding that it’s not so lovely when the developer goes bankrupt and the weeds start growing in the bunkers.

So what does this have to do with Latin America? Well for one thing, I’d argue as always that you have to know when things are getting frothy and when there’s still plenty of appreciation left. Parts of Costa Rica and the Los Cabos area of Mexico were looking like nosebleed territory three years ago. Now that the flipping up north has stopped, there are fewer buyers willing to pay California prices for a strip of sand or a penthouse. In most of the rest of Latin America, however, there’s not much downside.

But (and there’s always a but), some developers will always get into trouble by overextending. The Wall Street Journal reported this week that Marriott is halting all development of its luxury building projects for owners. “The pullback affects all three formats that Marriott sells under its Marriott and Ritz-Carlton brands…Marriott is permanently exiting development of luxury-residential projects…” The article says that the company basically made no money whatsoever on its own projects after subtracting write-downs.

Sometimes bigger isn’t better.

A while back I pointed to a soap opera of a story on the Yellowstone Club World crack-up. The high-living husband was splitting from his high-living wife and it was throwing a wrench into the finances.

Apparently that was just the start of the troubles. Now that they’ve run headlong into a credit crunch, Yellowstone Club World filed for bankruptcy. If you read the AP story linked here it paints a story of an overextended company run by a guy who lives as big as the billionaire members: yachts, planes, Aston-Martins, and Bentleys for a start.

The club was initially just one ownership club in Montanta, but then Tim and Edra Blixseth started “an international replica of the Montana enterprise but with a steep $1.5 million buy-in fee. Over the next two years Tim Blixseth bought a chateau in France, a golf resort in Scotland, a villa in Mexico and an estate in the Caribbean.”

The Mexico part of that equation was Club World Tamarindo in the Costalegre region of Mexico, south of Puerto Vallarta. The club pulled out of that arrangement and it’s now just El Tamarindo Beach & Golf Resort. (Which is good news if you want to be a guest there–it’s less complicated now.)

This shows, once again, the perils of investing big bucks in a project where you are a member rather than a real owner of real property. This is the second major bankruptcy among luxury ownership clubs, after the crash of one marketed by Abercronbie and Kent a few years back. Tread carefully.

We’ve been posting a lot of new hotel reviews lately so I’ve been highlighting those, but time to catch up on some notable travel-related news from Latin America.

It looks like the Yellowstone Club World ownership club is crashing down and splitting up. We’re not sure yet what’s happening to the Tamarindo resort we’ve reviewed on the west coast of Mexico, but if anything it will be more open to outsiders and not less. Personally, it seems safer to own a smaller house outright than own a share in a vacation club with palatial resorts, but it doesn’t seem like the buyers are down to their last dollar anyway…

Are we ready for an environmentally conscious wine? Are we ready to give up the traditional bottle? The company putting out this green Malbec from Argentina hopes so. (Green as in eco-friendly, not Vinho Verde!) I’m skeptical that people will drink wine from a glorified milk carton, but you do have to admit it cuts down a lot of wasteful shipping weight.

When Super Bowl winning quarterback Eli Manning was ready for a wedding and honeymoon, he didn’t go to Disneyland. He got married at One & Only Palmilla in Los Cabos.

Speaking of celebrities and green travel, Leonardo DiCaprio looks to be moving forward with development of the private island he bought in Belize.

International Living reports that 16 new marinas are in the works for Costa Rica. The skeptic in us says half will never get built, but three are already slated to open in 2009. Some will not open without a fight, however, as not everyone is thrilled about the pace of new development, especially for Puerto Viejo in the LimĂłn province of the Caribbean. Plus it’ll be interesting to see what happens to the yacht business if the recession and fuel cost rises continue…

In another sign of the shakeouts and consolidation in the luxury vacation ownership club market, Ultimate Resort (www.ultimateresort.com) and Private Escapes (www.privateescapes.com) are set to become one company. This is a merger of the second-largest and third-largest operators, so this development will lead to a Pepsi and Coke duopoly at the top of the scale in this industry.

According to the company press release, “The new combined club…will account for more than 25 percent of the total market share and boast a global resort real estate portfolio with a fair market value of $200 million.”

There’s a high amount of geographic overlap in these clubs, so in some ways this is bulking up more that providing more breadth. Even after the merger, there are only “nearly 50 destinations,” with the Latin America choices limited to a few spots in Mexico and Costa Rica. (Hint,–these clubs love Los Cabos.)

Depending on how much of a payment you can swing, you’re routed into one of three pecking orders. “The combined company will operate three distinct destination clubs targeting the $1 million, $2 million and $3 million average home value club categories.” There are now 1,200 combined club members, but no word on how many are in that highest category.

Expect a bit of membership campaigning and due diligence before the planned closing in mid-November. The final named of the merged destination club is to be determined.

“Fractional vacation home” companies bristle at the word “timeshare” since it has connotations of tawdry developments and fast-talking sharks trying to bamboozle you into something you don’t really want. But at the risk of alienating future advertisers, the luxury version of this game is not any more secure when it comes to the financials. The numbers are just bigger. This became very clear with the recent belly-up move of a company marketed by esteemed names Abercrombie and Kent and Andrew Harper’s Hideaway Report. Get the sordid details from this USA Today story: Members of a bankrupt vacation club strike back.

As anyone who runs these things should know, when you stiff a bunch of rich people, an army of lawyers will follow. And stiff them they did.

“The clubs, which enabled members to stay in a network of multimillion-dollar vacation homes in glamorous destinations, cost $100,000 to $1.3 million to join, plus annual dues and daily usage fees. Abercrombie & Kent and Harper ended their association with the clubs, which they did not operate, two years ago. Re-branded as Tanner & Haley destination clubs, they went bankrupt in 2006.”

In other words, people put up the price of a nice little beach house for a fractional share in a bigger and nicer one and were left with…nada.

Here’s a bit of advice. Buying a real house or condo that you own outright is real: real property, real title, real ownership, and you at the helm. If you must buy into a fractional plan to get rid of ownership hassles and leverage into a bigger place, due even more due diligence than you would for an outright purchase, not less. The risks are higher, the ability to even break even on a future sale is iffy, and the unknowns are greater. You can find plenty of people who have done this and are thrilled. Be one of them instead of the ones having weekly meetings with a class action attorney.