This looks a really interesting project, very well situated too. There obviously is a premium in the price for luxury and location, but it looks a very fair deal.

There are 1-2 things I would like to know

1. The 30/70 funding is obviously quite disadvantageous wrt the recent Prague deals which were 15/85. Could this reflect ?
a. Even greater confidence in the deal by PS of the inherent value?

b. Would it be possible to draw funds in the Slovak Rep ahead to finance the 30% first payment? Otherwise I would have to remortgage here or take a loan to fund that payment.


2. Would the fact that panelak values in Kosice are rising considerably underpin the value of new developments for the next 2-3 years?

Hello Charles,

Thank you for taking the time to look at the new Slovakia deal. Kim and I visited this site just last week and I can confirm that the location is one of the best, if not the best I have seen in CEE. Kosice is a beautiful and very compact city; everything you need is within walking distance. I will be writing an article for the website about my visit to Slovakia as soon as possible so please look out for this.

To answer your questions, 30/70 are not the best payment terms compared to previous PS deals but for Slovakia at the present time they are very favorable. We spoke to a number of management and sourcing companies last week and many terms are stage payments meaning early drawdown of mortgages. We opted for this deal because it is outstanding; it is by far the most significant residential and commercial development in Kosice for some time. You can hear the building work from the old town and after a 2 minute walk you are on the site. Brewery refurbishments always offer something different and usually stand out above anything else being built in the area.

I believe there are two mortgage options for someone who does not want to part with the 30% cash. Firstly you could apply for 90%, wait for completion and take 20% back in cash, secondly you could apply for the mortgage at the earliest convenience, pay the deposit with the mortgage (time permitting) but pay interest for the build period on the 30%. I personally would recommend paying the deposit in cash and mortgaging the remaining 70%; this may be a big hit but the capital gains you make by Q3 2009 would surely cushion the blow.

It is true that panelaks are growing in value in Slovakia and more accurately Kosice; this is down to locals trading up and moving to bigger apartments. The new build market is growing quicker and as with other CEE countries the price per square metre will grow much stronger.

If you or anyone else has any further questions or would like to speak to someone about this deal, please do not hesitate to contact me on purchasesupport@propertysecrets.net

Kind regards,

Martin Grainger

Head of Portfolio Development