Hi Mike,

Thanks for the reply. It's cetainly good to know what other people are doing. You have an interesting strategy. I'm presuming you don't have a mortgage - otherwise you may be slightly concerned to be paying it and getting no rent...? Don't forget, you can mortgage the finish and kitchen. It means about 5.8K extra in cash (on an 80% mortgage, less if you get an 85%). We'll have to wait to see how the whole rental situation pans out. I too am reluctant to go for the short term rent. I guess we're all just hoping that those workers in the gas terminal will be many!

Whe I completed in Pelikan in the autumn, part of the deal with the PLS was to get a report from PS, which outlined the pros and cons of selling or renting, etc. It was pretty detailed. I assume that the same will happen with Platan ... looking forward to reading it (and / or a comment from Simon).

Would be greatly interested in seeing your pics and reading your impressions- please post!

Cheers,

Richard

Generally the prices in Poland are currently at the same level as they used to be in September and October last year. It is good news because it means that they are not going down. Warsaw market is in fact picking up. We are closing more transactions and there are more enquiries from potential buyers and tenants. This is not the situation in other Polish markets yet but Warsaw has always been the first one to improve and the last one to get worse.

Many Polish analysts of real estate market see an opportunity in the 2nd and 3rd tier tourist resorts in Poland for the simple reason that the prices of apartments in the most popular resorts such as Sopot (TriCity) and Zakopana (Tatra mountains) are at the Warsaw level or higher. Therefore assuming the growing affluence of the Polish society those who need to buy holiday homes will have to go to places like Swinoujscie to be able to afford to buy them. This is not going to happen overnight but I see three sources of demand for your Platan apartments: 1. local demand to move from old panelaks to new builds, 2. migration to the city due to jobs availability (gas terminal) which refers to both tenants and buyers and 3. holiday homes buyers from Szczecin, Poznan, Gdansk, Warsaw.

I am not trying to be over-optimistic but I think that in the long term you should not be so much frustrated with your investment in Platan Complex.

Stanislaw Staromlynski
I-propertyassets

Stanislaw,

On the basis of an extremely bulish prospectus, including comments such as "very conservatively, I believe that Platan will be at least 7000PLN well before completion", I purchased into this development as a short to medium term investment that could be sold to help cashflow my other CEE investments.

Holding on for the longer term is not attractive as the financing, furnishing, and management costs mean that this will be another stongly cash negative investment but on the other hand selling now will entail a large capital loss.

To help me in taking an informed decision about whether or not to hold on, I would like to hear from the deal analyst about what factors he thinks are behind the failure of Plathan to take off as predicted and what he now thinks its future is.

Regards

Alan

Thanks Stanslaw

Pity you were not part of PS when the investment prospectus was put together !

I am not so bothered about the mid to long term at the moment, rather the value of spending money going beyond black finish at the present time.

So with regard to your three sources of demand… As 2 & 3 are longer term 1 is therefore the most relevant, and it has been identified that there is a glut of apartments available to buy. Thus we are left with people who choosing to trade up and rent 'better' units than they have already (as opposed to short term holiday lets). It would be interesting to know the numbers you think might be involved. Am I (and fellow investors) going to be trampled underfoot if units are made available, or would you think they will sit gathering dust for the foreseeable future ?

Kind regards
Mike

Hi Richard

Proud to be different :o) No worries re the photos etc, will do - expect mid-week though as work is a nightmare at the moment. !

Have not taken out PLS as yet, might explain why it is difficult to get a detailed response from PS regarding rental prospects. Seems a bit of a waste of money to me paying to complete to white finish, then paying for a report that says there is no-one wishing to rent you unit at the moment and it is a buyers market.

Correct regarding the mortgage, or lack of it. It's not an ideal situation and will probably prevent me doing other investments for the time-being. On the plus side it saves me having to deal with Polish banks for the moment, life is too short and I am beginning to loose the will to live at the prospect. The intention would be to refinance once the land registry certificates are obtained. I'm assuming that this will probably take the remainder of the year, by which time that nice gas terminal should be much nearer…. From a personal point of view I regard this as a relatively 'modest' investment, so a mortgage with or without rent is 'manageable'. Would certainly be pulling my hair out if I was relying on it for anything else.

I'm reasonably relaxed about Platan in the mid-long term and certainly didn’t buy purely on the basis of the Investment report - to me some of the statements were (and still are) somewhat 'iffy'. My day job involves reading consultants transport reports telling me that black is white, white is black, and that I have to believe them - so feel reasonably able to spot the more obvious steaming bovine related assumptions when I see them. To me Investment reports are a slightly different version of the same beast. They are 'speculative analysis' prepared by those aiming to part the investor with their money, and which should therefore be taken with the pinch of proverbial salt.

Part of the appeal for me was that the unit was about a quarter of the price of Jurmala in Latvia, and half the price of Parnu in Estonia, with access to Scandinavia and Germany and which will hopefully may make a good holiday home / base if the investment fails to live up to expectations.

Rgds
Mike

Thanks for the thoughtful reply Stanislav.

Like the others who have contributed to this thread, I am reasonably calm about longer term prospects. It so happened that the exciting prospect of flipping didn't work out but that is just what happens with life - it is impossible to predict exactly when markets will turn and this one turned a bit earlier than was forecast.

I agree with Mike, however, that the experience does put into perspective the bullish and perhaps over-confident statements put out in some Investment Reports. I think that after the huge gains in Krakow and Warsaw in 06, PS (along with Robert perhaps in Poland) got swept along a bit on a wave of market euphoria and started over-talking prospects for other developments. When the market is at its hottest, it's difficult to stand back a bit, no? Now that Simon has moved onto Romania, which is apparently in the midst of a similar boom, perhaps there is a a lesson to bear in mind ...?

Anyway, roll out the gas pipelines in the North Sea ... hmmm, now I think about it, where is this gas coming from and how will it get to Swinoujscie??

Richard

Hi

Just returned from a few days away to visit the development - will post the photos tomoorrow when they have been parted from the laptop. Flew to Berlin and took the train to Szczecin where I based myself for three nights, and made the 2 hour train trek to Swinoujscie on Saturday as this was supposed to be the best of the days weather wise.

On arrival the free ferry to the main island is the other side of the road from the station and runs every 20 minutes or so. The main streets are a few minutes walk from the ferry and the helpful tourist offices, and pretty soon I stumbled across a letting agent who was open. Had a productive conversation in English with the chap who dealt mainly in long term lets. Whilst he did not claim to have any knowledge of short term lettings, he thought for a one bed Platan type unit that you could probably achieve about 70% of the annual long term rent in 3 months of the high season (depending on the weather). From this however you would need to deduct the arrangement fee up to 20%, plus cleaning, etc, also with the prospect of more wear and tear on the unit.

Having had the above conversation I certainly feel a lot more reassured than when I stepped off the ferry, and see no reason to be deflected from my previous strategy of leaving the unit as black finish for the moment (financial necessity) and going for long term lets upon completion.

Work on the remaining buildings in Platan has started, and there is a large-ish (recently completed ?) development over the road on the south-west side of the development. Pleased to report that no parts of the development are overlooked by their surrounding buildings. There is a panalak estate nearby, although this consists of mostly fairly modest 4-5 story blocks. There were a few 'towers' in the town (some in what looked like fairly shabby external condition to the far south-east), but as a whole the town is fairly low-rise.

Also of note immediately surrounding the development was a new-ish Lidl within a couple of minutes walk, and a new railway station on the other side of the road from building G. The extension is non-electrified with track and signalling currently in place and I understand they are hoping to have it operational by the summer (although not guaranteed) The station itself is a short extension to the existing DB line that currently terminates at the German border, and will handle 2 2-car trains on each of its two platforms and is shown on the DB maps as Swinoujscie Centrum. There were however no hoardings to suggest that this is going to be a 'fast-line' with 75 minutes travel time to Berlin, the only ones I saw en-route from Berlin showed major improvements from Berlin to Szczecin.

The development is about 15 minutes walk to the beach, crossing the parkland area which to paraphrase Michael Cane consists of 'Trees. Thousands of 'em' The beach itself was as expected, large, windswept, and extending as far as the eye could see on the German side. Also popped over the border to German soil, and can confirm that there is now vehicular access over the border with no border controls here (or on the train from Berlin the day before).

In summary, pleased with both the development and the resort itself which met expectations having previously visited other Baltic resorts. Also have some pictures of the Baltic Park development whilch I will post tomorrow, these contain some pictures of the Promenade. And no, I cannot pronounce the place properly yet !

HTH
Mike

Mike,

Thanks for the update, I will be travelling out there in April and will spend a bit of time looking at the rental market.

I will be looking mainly at the long term market, as I already have properties that I run a holiday lets, and would prefer not to have any more. The reson for this is despite on the face of it being potentially more profitable, set up and running costs are very high. It is very easy to end up with an investment that only generates cash for the agents, managers, cleaners, decorators etc.


PS

I am dissapointed that the deal analyst has so far not provided an update about why Platan has not performed as expected, any chance of someone following this up. On the plus side the fit out options look good.

Regards

Alan

As promised, photos from last weekends trip.
Second batch to follow.

Brgds
Mike

Second batch from the weekend