Robin,

Good to read as I have a couple of units on Kosik. Not been the best of growth to date, compared to other developments, but I believe this will change when all the phases have been completed.

Have you data relating to 3kk units for Kosik, as this is what I purchased? I have purchased on Central Park too. Any new data on prices here?

Also, what's your view on realistic expected growth for Prague over the next 2 years??

Robin,

Perhaps I am missing something, but in themsleves I don't think these figures tell us very much about the future for CEE price rises. Yes there was a surge in prices and a large decline in the relative value of the £ but this is now past history and doesn't necessarily provide any pointer to future performance. Also the small size of the sample means that, for every sale, I could point you to forum contribitors who have reported they cannot sell at prices that would cover their costs.

Of more concern to me are indicators such as the fact that flats are now coming onto the Polish market at 2 or 3 times the rate they are being sold (see the latest Rednet report). Could we have PS's view about what that means for the future.

At present, I cannot give much credibility to PS's assertions about the future direction of property markets. as you seem to be seizing on any piece of potentially positive information to justify claims on continuing price growth and ignoring anything that conflicts with this.

Hi Alan

Well, yes I think you are missing something actually.

What these figures demonstrate is the performance of several of our deals in several key markets. We believe they are significant. They certainly are to those investors who took their profits. What would be a better measure of how well we pick and put together deals than investors' resale figures?

Do they tell us about the future of prices? Not in themselves, no. But they, I would suggest, tell you something about PS ability to offer good deals.

Of course, not every deal has performed equally well, naturally enough. However, this shouldn't stop us happily pointing out matters when deals perform exceptionally well. We will continue to feed through data, good and not so good (as we have done in the past), to gradually paint as full a picture as we are able.

I can't see the point you make about the surge in the value of currencies against the £. If you look at the table, you'll see we have carefully recorded performance in local currency and £s, to specifically allow people to see performance without reference to currency fluctuations.

The comments you make about the Polish market are fair enough and we have kept up a consistent commentary on this market and will continue to do so. We have reported the flat prices, the oversupply in some areas and made clear how we see this market will develop. I agree, this is interesting and important, that's why we've covered it. But it should not stop us recording some resale data - surely!

I'm sorry you feel we simply seize on convenient information. But, as you can probably tell from the above, I don't agree this is a fair assessment.

We'll go on giving our views and recording resale data as and when we have more and, hopefully, in the process convince you that we do look at markets objectively.

Cheers

John
I'll ask about the developments you mention and we'll post here to let you know.

As for Prague, our view is 20 -25% over the next two years in the best performing areas, the falling back to around 10 to 15%

Regards

Surely we can all agree with PS that information concerning sales of properties is the best data we can have.Up until this latest report we have had reports on percentage rises but to see the results of actual sales at actual locations is real evidence.
I look forward to similar reports on other locations.

Hi Robin,

Interesting discussion and good results but as a percentage of properties it is a very small amount. There only seem to be sales in Poland and Czech republic. I have talked to one of the pr secrets staff only 1 romanian sale as yet and no more looking likely at the moment. I think Property Secrets are trying to do a thorough job but I am a bit worried these markets are getting saturated too quickly and becoming unaffordable to the locals. From a couple of sources i've heard that poland (especially warsaw) is massively oversupplied now, with lots of construction still going on and years of backlogs of property banking up.

These sources also had another interesting fact that seemed to be backed up by someone at pr secrets that about a tenth of properties in poland are being bought by foreign investors. In Romania and Bulgaria this quadruples to nearly 40%. This seems worrying to me as this doesn't seem to indicate very easy resales and a possible mass oversupply problem especially the fact that very little has been sold in romania and we are only early in their property cycle. This has happened much later in poland. I am also a bit worried that this will happen in Sofia and that it will become like the seaside and mountain resorts. By this I mean mass foreign investment and very little chance of ever reselling at a profit, even in the medium/long term. My basis for this is that I have been approached by at least 3 other firms trying to sell me property in Sofia in the last two months. i just wonder whether this is the tip of the iceberg. Are they going to kill the golden goose?

My last point agrees with Alan. Are we automatically going to see a 2nd wave of polish property growth or are we going to have like the baltics, a one way downward spiral for the forseeable future? Are we being realistic that anywhere is truly going to see the massive property price gains of the last few years again. Has this been a one off? Before people say you are just dishing the european property market and have an agenda to see it falter and am just trying to rubbish pr secrets I am an investor as well. I have invested through p secrets myself in several developments. I am just giving my honest thoughts. We're seeing what's happening in the uk property market and experiencing the pain of it directly or indirectly(price falls, lending toughened, general higher living costs and a weaker economy). I hope the worst of this steers away from the european property markets. Finally I really hope I'm just being a pessimist and these markets prove rosy and sucessful for us all. I am sorry to sound so melancholy but I've had a rather large money fraud committed against me recently and this can colour ones views (hopefully wrongly!). I am not saying property secrets are doing anything fraudulent, far from it! They seem to have a thorough and professional setup I'm just worried the markets might not turn out as lucrative as we hope. S B

Prices of apartments in Poland stopped rising in mid 2007. We have informed investors about it in several articles. Investors who are now selling apartments purchased in 2005 and 2006 are getting considerable profit boosted by the rate of exchange. However, the market is slow and it takes more time to find buyers. Those who purchased in 2007 do not see their profits as they purchased at the end of the rising wave.

Generally, if you paid 4,000 to 6,000 PLN per sqm in WARSAW, now you can make about 100% profit on selling your apartments. If you paid 8,000 - 10,000 PLN per sqm in 2007, you are not going to make profit trying to flip or sell apartments now.

The prices of sold apartments do not give much information about the prices in the future but they prove that the prices are not going down, which is actually good news. Polish market is currently oversupplied. 20% of the apartments on the market are owned by investors who want to make their profits. Panelaks went down 30% so secondary market which used to propel the primary market is almost dead. Panelak owners were those who used to buy new builds after selling their panelaks and now they cannot afford to do that. The over supply should be consumed within the next 6 months and the situation should come back to normal i.e. relatively balanced demand and supply, which does not mean that the prices will go up automatically.

Poland is a relatively safe real estate market: it is large (38,000,000 people) so there are no big and fast changes and secondly the boom in Poland was generated by the local demand (foreigners purchased only 8-10% of all available apartments annually). I would like to repeat that the demand is there. The economy is doing very well. The incomes are increasing. Financing is available as well. It is a question of time when situation goes back to normal. Normal meaning there will be more buyers who can pay the current prices. There is a lot of new apartments to be completed soon. However, I wish to say that again: good locations will keep on selling at good pieces and their prices shall be going up 5% annually; bad locations will have either 0% growth or small decrease in prices per sqm.

Stanislaw Staromlynski
I-propertyassets
stan@i-propertyassets.com

Stan,
Thankyou for your reply which seems quite positive for polish property but i'm not sure all will change in 6 months. Other articles i've read mention vast oversupply taking years to lose.Again hopefully I'm wrong! What about other markets no mention of romania, bulgaria, slovakia etc. Is it possible to sell anything for romania and bulgaria? I've also read that it is virtually impossible to shift anything quickly or at a profit, I have had so much info about slovakia. Is there any rental market potential for any or all of these markets at anywhere near mortgage costs?
Your thoughts would be appreciated

S B

My view is that Eastern Europe has seen so much recent growth that a lengthy period of consolidation could well occur (i.e. 3-4 years).

I can't see how property yielding 4% or so can have further growth. Will the yield just keep falling to the lowest in the world? I doubt it.

My one bed in Warsaw is now worth more than most similar properties in the UK yet wages remain significantly lower. Wage growth will take many years to catch up hence property growth are likely to remain low.

I posted elsewhere asking what the fundamentals for future growth are. We keep hearing about migrants returning home, a relaxing of LTV's and increased mortgage availability but what about the real fundamentals - wages at a realistic multiple to the purchase cost.

In Eastern Europe such multiples are way too high and therefore a period of consolidation will probably occur.

PS find me a property with a yield of at least 7-8% and I will invest there. I just can't see that much future growth in the likes of Poland, Czech etc with yields already so low.

Thankyou for your reply Tom,

You sound bearish but possibly not as much as me.
I think we are on the same lines in that the quick turnaround and rapid regrowth of eastern european property however welcome that maybe for all us as investors( I have gone into eastern european property as well, in my case at just the wrong time!) seems unlikely in the short to early medium term. I just can't see how any one can have a quick exit unless they have bought very early in the cycle and can afford to sell at a considerable discount. Easy to say in hindsight but I wish I had left the money in the bank or dare I say it waited for the uk property market to come down. The worry for me is that these are foreign countries with foreign systems that might not be as robust or long term as the uk. The finance and credit markets although emerging must be under pressure to contract (as they are in more developed markets) The other worry is that we are obsessed with owning property here are our european neighbours?
Again I hope I'm wrong with my assessments but just cannot see a bright light at the end of the tunnel for a while.
cheers
Simon