Investors & PS staff,

I've got a unit in the above development and thought a post on the forum to find out what other investors intend doing with their investment may help people decide whether to sell/rent etc.

Has anyone managed to get a mortgage aproved on the market value of the flat and not the actual purchase price from 18 months ago?

I've been advised that all Czech mortgages have a 10% early redemption penalty as well as having a minimum tie in period of 12 months - this makes it rather costly to sell on wihin a few months of completion. Is it possible to sell the unit before one completion?

Any thoughts from anyone with a unit within the Old Brewery or the Czech Republic?

Thanks
Shaun

If you were to hold the unit for a couple of years and then remortgage it, I would guess that the new valuation would have to be on the market price at that time.

Prague 7 is having a lot of redevelopment so it would probably be better to hold it and rent it out. Especially if a lot of new office space is going to be built in the area
http: / /www .praha7 .cz /About -Prague -7 /Future -of -Prague -7

It would be interesting if PS could find out if the redevelopment of Bubny railway land by Orco is going ahead.

There is some info about the Bubny redevelopment in these articles, although it looks like it might be on hold for a while

http: / /uk .reuters .com /article /rbssFinancialServicesAndRealEstateNews /idUKL2420927720080624

http: / /www .cbw .cz /en /orco -tumbles -further -before -planned -rescue -measures - /8308 .html

A contact at Orco has said that most of the Bubny Railway Land is in the final stages of master planning and that a small proportion (outside of main master plan) should get building permit Q1 2009.

It is annoying that banks will only lend on PP rather than OMV.. however when looking at the investment being more or less cashflow positive, in my experience a mortgage of 100% on initial PP has put me on the positive side of cashflow breakeven line based on market rental due diligence, releasing enough cash (initial 15%) to buy into another high growth area. Hopefully the units will rent quickly, although when I viewed the development approx 2.5 months ago, the site was a mess.

Ultimately I plan to hold this investment for at least 5 years to take advantage of the capital gains scenario in Czech Republic and the continuing strong growth in Prague 7. The strengthening rental market over the next couple of years will hopefully give me enough yield to re-finance in a couple of years after the 2yr fix expires.

Another option I am looking into to realise value is to value a company holding the asset(s) and sell shares or use as a seed asset in a small fund. Can anyone comment as to whether this is a viable option??

Cheers.

Hi Shaun,

I know the Old Brewery development very well having visited it a few times and having done a fair few site visits in Prague 7, Holesovic. In my opinion Prague 7 is the best value district in Prague with its mix of resi and commercial developments, the marina and being only 5 minutes by metro to the centre.

If I had property on the Old Brewery (and I wish I did) I would hold it for 5 years at least. You own property close to the centre of Prague - the capital city of a country on the up economically; selling now would be a bad move. If you want to take some profit out of this investment you can remortgage after 1 year but please contact a bank or broker if you want to discuss this option further.

You cannot flip, or re-assign the contract on this development, meaning you do need to complete.

Kind regards,

Martin Grainger
Head of Portfolio Development

Thanks for the feedback - those links are an interesting read.

Will then opt to hold onto this investment for a few years at least. I'm going to be visiting the Old Brewery with Lenka from ING on the 26th August. I'll update this post once I'm back.

Thanks again
Shaun

Hi Shaun,

Pictures would be great!!

Thanks,

Martin

Martin,
Would you be possible to obtain for us, just a rough valuation on the units at completion? I don't mean an official valuation but more of a back of fag packet job!

James Procter

Hi James

We'll be publishing our Czech Market Performance Report in the next couple of weeks. That will contain the information you're after. As you're a PRO member, you'll be able to download it free.

Keep an eye on your inbox for an email about this.