As an investor in Nad Luckami, III Towers and the old town in Bratislava I'm really interested to see the valuations on Cubicon. The average of £1800 per sqm is 50% higher than Nad Luckami and III Towers and only 10% lower than the value I was given a few months ago on my apartment right in the pedestrian area of the old town.

I assume Nad Luckami will be judged a slightly lower class development but the location in terms of the tram links to the centre appear better at NL. I would have thought III Towers was of similar quality and is nearer the centre.

Intinctively I would have thought the actual price was nearer the true value than the higher valuation and I'd be interested in PS's comments regarding these comparisons.
Huw

Hi Huw,

that is exactly what came to my mind. I had an impression that independent valuation figure might be quite high for this development. Looking on the website of the developer, it seems like that they started to sell units in 15.08.2007, which is exactly 6 months ago. Still most of the units are free (at least on their website), and I counted that 35 are currently reserved. It would be interesting to know if this includes or not 30 units currently reserved by PS.

My experience is that when units are significantly BMV, they are reserved/sold withing few days/weeks..although there might be a possibility that local people are not aware of the development? So I am interested in answer from PS about that, maybe I can learn something new.

Otherwise, in my opinion, anticipated growth for Bratislava as expected by PS is realistic for me, and also payment terms 15/85 are excellent. I have not came accross such good payment terms in Bratislava market yet. It is very common now that payment terms are like 30/70, or even more common we see stage payments, and developers are simply not willing to discuss this at all. So PS has done very good job on this one.

Hi Marek/ Huw

I can't comment on III Towers or Nad Luckami, but from the information i received from the Colliers valuation, there are two develpments, Cesta Kamzik (average 68,300) and a similar mixed use project in Slavicie Udolie (used in the report and excluding parking) at 75,000 psm which i believe provide good comparables as they are the closest to Cubicon.

Both these developments, however, will have reached completion more than 1 year ahead of Cubicon. Cubicon is in an excellent location close to the centre and the new D2 motorway to Vienna.

They have used quite a few developments in the suburbs of the city in their valuation which confuses things a little. The new Slovakia Market Profile gives a good idea of the level of growth in prices in the city in 2007. This would go some way to explaining why Colliers have valued these units at 80,000psm.

I would also suggest looking closely at the map on page 27 of the Colliers valuation which shows Cubicon's close proximity to the old town.


Cheers
Brett

Hi Brett

I would have thought Nad Luckami in particlular would have been a good comparator as it's close by and familiar to PS investors. The location of Nad Luckami is a similar distance to the centre and it's right on a tram line. I think dual use is a bit of a red herring.

These valuations seem to throw up more questions than they aswer as the average value in Karlova Ves shown in Colliers' valuation is 46,000SKK for 2008 for new sales whereas PS values apartments at Nad Luckami at 62,000SKK. Are PS aware of any sales/flips in this development so we can get an idea for the actual values?

I remain to be convinced 80,000SKK is realistic.
Huw

Dear All,

I would like to engage with this forum discussion as I feel that my team and network offer a view from actual activity on the ground in Bratislava. Renting units and selling units in Nad Luckami at this present time put me very close to the market activity.

You state that the Colliers valuation report of 80,000skk per square meter is unrealistic. This conclusion is based upon faulty reasoning and invalid assumptions which I will go into in more detail below.

The first flaw in your argument is that you state the offer price for Cubicon is 50% higher than Nad Luckami. Nad Luckami was 38,000 when it was launched in April 2005. We have units for sale on to the secondary market in this now complete development at prices between 65,000 and 69,000.

Furthermore, you state that Nad Luckami has better connections to the city centre which I would strongly disagree with. Please see the map in the investment report demonstrating the tram routes and main road leading right into the centre. Both have equally good connectivity but with Cubicon slightly closer and in a different area. Nad Luckami’s area is strongly residential with a build limitation from the city authorities. There are a large number of old residential blocks here as well.

Which leads me to what I feel is the strongest argument against your reasoning. Cubicon is in an area that is more closely considered part of the city centre than Nad Luckami which is very much a residential suburb. Therefore the fact that Cubicon is elevated up on the hill, 1 km from the River apartments development which is selling for a staggering 120,000 per square meter and that Cubicon is the brand development (central in an area project) in an area surrounded by the university hospital and commercial activity position Cubicon as a higher value development then Nad Luckami.

You are correct in focusing on Nad Luckami as a good comparison but we should take what is today’s Nad Luckami price (67,000 on average), inflate it to take into account the benefits of Cubicon listed above and in more detail in the investment report and then see where we are in relation to the Colliers report.

I also phoned my management partner in Bratislava and without alluding to any of the figures above asked her if she new the Cubicon project and whether I should pay 80,000 in this project. She believed that this was an accurate price. When I said that we were selling at 63,000 she was very impressed.

Before I sign off I would like say that the independent valuation is exactly that, independent and we believe that they are a credible outfit.

All the best

Oliver Watts

Hello Oliver,

Thank you for this informative response, this is great.

If any of our clients wish to discuss this opportunity please feel free to contact me on purchasesupport@propertysecrets.net with you questions and I will call you back from Monday.

Kind regards,

Martin Grainger
Head of Portfolio Development

Hi Guys

Not surprised you think it's great Martin!

Oliver, thanks for your response and for explaining the reasons for the differentials. This is exactly what I was looking for but didn't get initially. Sounds feasible although I think calling it part of the city centre is stretching it somwhat. Are you aware of any units in Nad Luckami actually selling for this value?
Huw

Oliver

Thanks for your informative post.

But I must raise the issue of comparing like for like which keeps coming up when we are looking at capital growth figures on previous developments.

You are saying Nad Luckami bought at 38,000 skk sqm but this is only the base price without VAT & parking & kitchens once you add these my 2 units are coming out at around 49,000, this makes a big difference in % capital growth comparing to the sales value on the secondary market of 65,000 you are quoting which I am sure will include VAT, parking & probably kitchens aswell.

On your calculations that is 71% growth on mine (actual growth on the investment) it is 32% - that is a big difference !

This same issue keeps coming up, you cannot compare the per sqm basis used on new developments (ie black finish excl vat) with secondary market sales sqm values (which include parking, vat, kitchens & white finish - in some countries).

You can only compare in this way new developments with other new developments, NOT with secondary market sales unless you make the necessary calculation from the info in the spreadsheet to compare like for like.

I would like PS to acknowledge this recurring issue and address it going forward....

Thanks Antony

Antony I have to agree.

Interesting stats on capital city values in Sofia Echo which shows Bratislava to be good value (although difficult to compare like with like).:

LOWEST IN EUROPE
Average house prices in Sofia were 1487 euro a sq m, making it the fourth cheapest European capital in terms of absolute residential property prices, according to a survey carried out by Global Property Guide. Only Bratislava in Slovakia at 1292 euro a sq m; Skopje, Macedonia 1133 euro a sq m; and Chisinau, Moldova, 902 euro a sq m were cheaper. Bulgaria was only slightly less expensive than Hungary, 1792 euro a sq m; Malta, 1967 euro a sq m; and Belgium, 2150 euro a sq m. Average property prices in Bucharest, by comparison, were 2350 euro a sq m. Russia at 11 501 euro a sq m and Lithuania with prices of 3792 euro a sq m were the most expensive counties of Central and Eastern European.

Huw