|
Slovak Investments welcome you to our November '05 Newsletter Contents:
1. Koliba Villas Success
2. The Slovak Economy - Latest News 3. Mixed-use River-side Developments 4. Investment Deals to Come
********************************************************
1. Koliba Villas Success ********************************************************
We would like to proudly start this newsletter with news of the Koliba Villas development which we launched a couple months back. From the moment we approached the Slovak property market and set up business, our investment strategy has been to avoid opportunistic developments aimed at meeting short term housing demand and concentrate on quality developments in established areas where exclusive location adds a premium as the market matures.
After all, jumping on board anything at a low price in an emerging market with the assumption it will do well, and without consideration as to how surrounding developments and local changes will impact its value, is not the way to outperform the market and see the best return on your investment!
So Koliba ticked all the right boxes, and after having invested in two apartments there ourselves and seen the strong response from overseas investors (we still have a queue waiting for Koliba Villas should any investors drop out!) we are encouraged that there is an investor appetite for this strategy.
It is equally encouraging that we are achieving a high and respectable profile with local finance houses and developers whose feedback has been positive about our business, and these deepening relationships can only yield better deals for you and us in the future.
Months on and Koliba Villas has almost exclusively sold to local buyers. Slovak buyers are almost always owner-occupiers, which means essentially that our investors now have key properties for rental in Koliba at the lowest price per meter square than any other comparable property. We are confident in the strong rental yields that will therefore be achieved and will be pointing investors in the right direction to achieve this closer to the time.
********************************************************
2. The Slovak Economy - Latest News********************************************************
Slovakia has long been identified by corporations and economic commentators as one of the most progressive new economies in Central Europe and most promising for foreign investment.
A combination of solid macroeconomic policies, comprehensive tax and social welfare reform, a strategic location to European markets and a tradition of manufacturing excellence and highly qualified labour are among the factors that have attracted high levels of foreign direct investment.
While the Slovak economy continues apace, there are key milestones as investors we need to keep in mind. One of these is entry into the Euro, which Slovakia is scheduled to join in Jan 2009.
In preparation for this, on Friday 25 November Slovakia made the Unexpected announcement that it has joined the ERM-2 exchange rate mechanism, a waiting room where the currency proves its stability for a minimum of two years before full euro adoption.
This is significant news, allowing Slovakia to manage the currency's fluctuation and attract investment. It also points to an appreciation of the crown in anticipation of joining the Euro. Juraj Kotian, an economist at Slovenska Sporitelna, the largest bank in Slovakia commented that "The currency has a potential to rise by between 5 and 10 percent in the next two years,".
With investors eyeing the emerging European markets closely, Slovakia is keen to set itself apart and make most of its strong fiscal record and reforms. As Global Insights reports: ?Bratislava 's unexpected move toward early membership in the ERM-II was an indication that Slovakia wants to differentiate itself from its larger neighbours, all of which are struggling to control fiscal deficits.?
Other recent news was the huge 6.2% year on year growth in Q3 2005, which underpins the finance minister's yearly growth forecast of 5.1% for 2005. The end of 2006 inflation forecast of 2.5% was left unchanged with the possibility of further rates cuts ? held at 3% recently ? should inflation contain itself.
For the property investor the paving of the way for an appreciating currency is excellent news, but another factor to keep in mind is the current trade deficit. The current account is set to improve massively in 2007 as Slovakia begins to export cars, not just importing products as it is at present, and this will in turn not only further drive the appreciation of the currency but also drive wages and employment upward.
With Bratislava already suffering a shortage of residential accommodation and ageing Communist housing stock, it is no surprise that developers are in a race to provide the kind of new build accommodation as the accumulatin economic factors outlined above lead to wealthier local labour and a growing foreign workforce over the latter end of next year onwards.
On a side note, it is often interesting to compare the flexibility and dynamism of a new economy like Slovakia to those of more mature, burdened Western economies. Slovakia's 19% flat rate tax has long been the envy of western European countries, and as the UK wrangles with the problem of what to do about pensions Slovakia can boast 6 people of active working age per pensioner. With so much room to grow and disciplined fiscal policies to manage this growth Slovakia continues its positive momentum.
********************************************************
3. Mixed-use River-side Development********************************************************
By the end of this year Andrej Durkovsky, the mayor of Bratislava, will announce the latest masterplan of Bratislava. The last masterplan of the city was published in 1976, and it has been recognised over the last few years that another was needed to represent the vision and ambitions of Bratislava in the 21st century.
In consultation with a variety of stakeholders, including major real estate developers, ecologists, civil engineers and social planners Durkovsky has said that what we can expect from the masterplan is a detailed outline for the development of Bratislava as a "white city" - a centre for commerce, services and businesses.
In particular Durkovsky has pointed to the industrial eye-sore to the east of Bratislava, expressing an intention to create the kind of water-side living and business parks similar to London's Docklands. It has long been recognised that Bratislava is currently unconnected from the majestic Danube that runs through it, and the focus of strategic investments on the banks of the river promise to provide some of the most valuable opportunities for the property investor in the upcoming years.
"The rather compact centre of Bratislava will enlarge towards the Danube River within the next few years. We want Bratislava to become a city on the Danube River, and this extraordinary river will become a city-forming element," said Andrej Durkovsky. The Mayor has plans to create kilometres of riverfront boardwalks, shops, coffee shops and parks over the next few years, and there are plans to include residential apartments within these mixed use schemes.
The Irish developer Ballymore Properties is a driving force behind this regeneration with plans for a massive mixed use project over a number of phases on the riverfront in front of the old town. The scheme will include hotels, restaurants, apartments and a business centre with offices all beside parks and a river promenade. Ballymore is expected to commence marketing and construction early in 2006.
On the other side of the old town, on the Danube west of the Ballymore project, will be the site of the eagerly awaited River Park mixed-use development. This project commonly known as the "City within a City"project is being brought to the market by the largest investor/developer in Slovakia and designed by the Dutch architect Erick van Egeraat. River Park will also include the first and only 5 star hotel in Bratislava.
The planned investment costs of River Park are in the region of EUR 120 million and will include designer shops and coffee shops, the hotel, luxury offices and retail outlets and over 40 000m2 of residential space. There is strong demand for apartments in River Park by investors and local Slovaks alike, however marketing will only start in 2006 some time as planning comes through in spring.
While both developments have attracted intense interest and represent Powerful opportunities as strategic investment along the Danube, Slovak Investments believes that as an investment the River Park development presents the best present value when taking into account pricing, time scales and concept. Our strong relationship with the developer, who our Slovak Partner Tomas Pivarnik has dealt with many times on previous projects, has allowed us to provide valuable input and put us in a position to negotiate deals for ourselves and our investors. To this end we are now asking investors to pre-register their interest in the run up to the reservation period next year.
Please register your interest by visiting http://www.slovakinvestments.com/deals.asp and we will contact you closer to the time of release to discuss your position.
********************************************************
4. Investment Deals to Come********************************************************
As mentioned in the last section of this newsletter, we are allowing investors to pre-register their interest in the River Park development coming up next year. We are hoping to get good options on apartments in this development due to our relationship with the developer.
You may or may not be aware of the Science and Technology Park being built in the east of Bratislava. The park will comprise over 600 000m2 of working and living space with a total investment of over 400 million Euros. Perfectly situated within easy reach of the Central Europe metropolises of Vienna, Prague and Budapest, CEPIT will attract thousands of new highly skilled employees. Slovak Investments have been watching the progress in the planning of a new development by a developer we know, which could provide suitable accommodation for employees at CEPIT. We will let you have details as soon as planning is through and we have negotiated good terms with the developer.
We are also being kept informed of a new residential development in between the Apollo Business Centre and the upcoming Ballymore project on the river. This location cannot be beaten for good city tenants and the value will do well being so near the Ballymore project which will lift prices in the area. We are very near to getting exclusivity and first pick of units here and of course you will be the first to hear about it when we start marketing at the beginning of next year.
********************************************************
Over the past few months we have met with many investors at our office in Bratislava and all these meetings have proven to be very constructive for both us and the investor. We would like to encourage anyone else planning a trip to Bratislava to pop in to our office to get to know us and to find out what we can do for you.
We hope that you have enjoyed this month?s newsletter and that it has offered some food for thought and we look forward to meeting and speaking to more of you in the coming months.
All the best,
The Slovak Investments Team
|
