Property values dropping: A definite possibility. I don't know your area at all, but if values have dropped from $270,000 to $235,000, they certainly could drop further. So what seems like a good deal now is only true when viewed from the past. Will $235,000 be considered a good deal a year from now? Not if the condos are priced at $200,000.
Builder going into bankruptcy: That's a double or triple whammy, and a definite possibility. Back in 1980, I bought a condo in a new development and the developer ended up going bankrupt. Among the concerns: Any units the builder hasn't yet sold won't be paying their condo fees, putting that burden on the other owners. The units themselves may be sold at fire sale prices. And one thing I ran into: I'd bought a condo and a parking space from the developer. Unfortunately, the paperwork filed with the local government never indicated that the ownership of the parking space had transferred. The developer failed to pay the taxes on the space; without the transfer, my lender never was aware of taxes due on the space. So I lost my parking space to a tax foreclosure. ("Luckily" I was able to buy it back from an investor who'd bought mine, and a dozen others.)
Slow sales: You say they haven't sold a unit since September and they're continuing to drop prices. Not only does that mean that prices likely are going to continue to fall, but it also means that your client won't be able to sell his property easily--if at all--while there's still original inventory on the market.
Condo fees rising: A likelihood. Even in normal situations, rising costs usually cause condo fees to rise. But here we have a situation where the developer may not be paying--or soon may not be paying--the fees on the unsold units. That puts the burden of the rising budget on fewer owners, inevitably raising the amount needed from each.
And we haven't even discussed the problem of other owners who bought in at the higher prices and now are unable to sell. That raises the distinct possibility that some of them--upon job loss, job relocation, job downsizing, or other economic problems--may be candidates for foreclosures or short sales. Either one will further depress prices. Further, even prior to the short sale or foreclosure, many owners stop paying condo fees, putting additional financial stress on the condo association.
What can you do to make sure your client's best interests are protected? Present the information above to him. Personally--and this is just me and I'm not at all familiar with that particular development--I'd fully explain all the risks and downsides to the situation and suggest that possibly he might want to rethink his decision.
Are there promised amenities--swimming pools, tennis courts, boat slips, etc.--that have been promised but not yet constructed? If so, understand that they might not be.
The other thing you can do is check all the condo's financial reports. Look at its budget. Does it have adequate reserves? Does it have enough of a track record to determine if its budget is realistic? How many condo owners aren't paying their condo fees? Are there any ongoing lawsuits involving the condo association? Does the developer have any special arrangement--financial or otherwise--with the condo association? (That's not unusual, but you need to know what those arrangements are.)
Further, if prices continue to drop, is your client prepared to own the condo for perhaps 5-7 years before considering selling? Even if prices remain exactly where they are, he wouldn't be able to sell without bringing money to the table. And even if prices rise by 5%=10% a year, he wouldn't be able to sell for perhaps 3 years (due to selling expenses) without bringing money to the table.
If your client says, "Look, I love this place. I plan on staying here for 10 years. And I can handle substantial rises in condo fees," then it may be a reasonable purchase. But if he says, "I like this place, but might only be here 3-4 years. And this kind of stretches my budget as is," then you might want to help him look at other properties.