Just got back from Prague where I have investments in Zelene and Kosic and here are my impressions. Like a lot of people I’ve found it difficult to let Zelene. I undoubtedly had more difficulty because I chose to see if it would let unfurnished. As a result of discussions with Orco I have decided to furnish so it remains to be seen how long it takes to let now. By discounting against comparable apartments hopefully it will let quickly and the good news is that if it does then the rental income net of fees will be in line with that forecast by PS originally. There is a new development going up next to Zelene. Apparently price per sqm ranges from 36,000 cK to 44,000 cK per sqm from ground floor up. Taking a mean average of 40,000 cK per sqm this means that the Zelene investment has increased by around 10%. This is slightly odd given that the discount claimed in the prospectus was 20% against the value of apartments actually sold to locals. This means either the locals overpaid, prices have decreased or the other development is of lower quality. I would be interested in PS’s views on this. Do you know the other development? It’s not Orco and unfortunately I don’t know what it’s called. All told, including fees it means I am still out of pocket on my Zelene purchase. Zelene is relatively close to the local business park and it’s certainly true that a lot of big business is moving in there. Companies include DHL, GE, Siemens - mainly high tech. This has to be positive for rental potential. I saw no signs of new metro stations being built and the nearest is currently some distance from Zelene. This is clearly a negative. The biggest new shopping mall in Prague is nearby and road links to the centre are good. It’s strange that the allocated parking to my apartment is in a different block – is that the same with others? I now doubt the necessity for parking as there was plenty available and in any event most likely tenants seem not to have cars. Many of the workers for the companies mentioned above are apparently Indian (which I found interesting) and they don’t drive. The Kosic development is coming on well. There was lots of activity on site and it looks as if it will complete on time. The quality looks good. I will post some pictures separately as last time I tried it wiped my whole text and I have had to start again! It’s better located for the business park than Zelene and therefore seems better value for this reason and the simple fact that it was cheaper. I have some reservations about rentals in the short term whilst phases 2 and 3 are being built. The question is how the building work affects the completed properties, which in part will depend on where your apartment is located. Mine is in the middle so hopefully will be OK. From the discussions I had with Orco, local agents and other professionals my opinion is that away from the centre Prague will see slow to moderate growth in the medium term and certainly nothing spectacular. There is a danger of over-supply but it is true that international businesses are still moving in. Rents nearer the centre where workers would probably prefer to be are too high for them to afford so there should still be demand for places like Kosic and Zelene (depending again on how much new property is built). The centre of Prague will in my view offer a better investment return in future as although most of the growth is in the past, supply is limited and this is where the better off locals and ex pats want to be. I’d advise anybody looking to take care, however as value is hard to find. I was particularly interested in the comparison between Prague and Bratislava. Personally I prefer the old town in Bratislava to Prague – it’s much smaller, much less overtly touristy (is that a word?) and therefore more intimate. Surprisingly, Bratislava old town (at least the pedestrian area) is more up-market. What’s particularly striking for me is the relative smartness of Prague away from the centre compared to Bratislava. Granted some of Bratislava simply needs to be knocked down and started again but the way I read it, with the huge amount of investment going into Bratislava in the next few years the place will be transformed. Add to this the lower starting base, the more favourable tax regime in Slovakia attracting more business and the fact that the buying process is much easier and that makes it a better investment over the next 10 years than Prague in my opinion. I hope I’m right as I have more investments here than in Prague! As with anywhere, however, one needs to be selective as there are undoubtedly some very over-priced new developments in Bratislava. As with Prague I would try for the old town but supply is very limited. Interestingly, one of the biggest property finding companies in Prague is now looking outside the Czech Republic. They were at pains to say that they still thought Prague was a good investment (supporting my view about the old town) but I think this is a clear sign of their opinion of the market in Prague. Anyway, hope this is of interest – I’ll try to post the pictures separately. Look forward to other comments and opinions. Huw

Hopefully these have now uploaded on separate thread. I've got more interior and exterior if anyone's interested. Huw

Can be found at this thread. http: / /www .propertysecrets .net /topic /22493 /0 /8291 .html Regards D.Busby

Huw Thanks for writing such a thorough post on your thoughts. I agree with Kosik, that the later phase building work could impact on the short term lettability. I wish I'd of thought of this beforehand as my unit is close to the next phase! Faz

Thanks for taking the time for such a detailed review. Pete

You're very welcome. Nice to know it's appreciated. Huw

Huw I meant to write earlier to say thanks. Your account was very helpful. I have invested in both Zelene and Kosik so read it with interest. Thanks for pics too. Its so difficult to judge these investments over this timeframe isn't it? If they are renting for something like breakeven and the value appears to be increasing steadily then that's success. Of course it would be good to be able to compare whether an investment elsewhere would have been better of worse but its far from an exact science. I'm satisfied with Zelene so far. I dont think I've actually made any money (or I wouldn't if I tried to bale out now) but my 2 units are now both occupied and I've learnt a lot since I first paid over my finders fee (nearly 2 years ago now). Hopefully my units are now worth more or less what I paid for them gross (incl of all fees) and I'll start to see some real value created over the next few years.

Huw I am in the process of researching my first CEE property investment. As you appear to have experience in some of the areas I am contemplating, I would be very interested in your opinion. I came to the conclusion that Slovakia would be a better bet than Prague now given that Prague has already seen a lot of appreciation and that rental yields are reportedly being squeezed due to the large number of new developments. However with regards to Slovakia, I am a little put off by the fact that i) only 70% LTV loans are available to foreigners (should I not try to increase my gearing?), ii) that the rental demand is questionable (especially with regard to new builds) because it would make more sense for locals to buy, and iii) that the town centre where rental is easier is I understand now relatively overpriced (especially if refurbed). I am consequently unsure where to focus my attention. Am I thinking about this the right way? Alternatively I am now wondering whether Poland would perhaps make more sense for me as a first time investor because my money would go further due to the more favourable financing terms available and hence smaller capital requirement. Your and others comments would be greatly appreciated. Regards, Fiona

Hi Fiona I've started a new topic with your question to make it easier for others to pick up and respond. It's called Slovakia, Czech or Poland and it's here: http: / /www .propertysecrets .net /topic /8301 .html Regards Huw

Huw, Would you be able to dig out the contact details of the Orco people that you met during your visit to Prague in September? I'm going out to the Repy development next week and I want to arrange some meetings with the developer and the letting agents. Thanks, --Peter