Hi, Wondering if anybody had any thoughts on the pros and cons of flipping Platan in Swinoujscie. The price has gone up 35% and the developer is selling for 5,700PLN/m2. But LOADS of folk are flipping - Stanislaw has pointed me in the directon of the redNet site where are 19 flipped flats for sale!! Presumably these won't sell unless they undercut the developer. On my calculation, if I sell at 5,500PLN/m2 (undercutting the others), after 3% sales fee and 19% capital gains, there's a net 3K profit. Not huge, but a bit nevertheless. On the other hand, there is the option of holding. The agent at redNet reminded me in Warsaw that the gas terminal will be bult in 2009 and it is then that demand for flats will perhaps increase. So the development may yet see some rises. I am just wondering if these rises will cover the costs if white finish, kitchen, etc. Other people's views welcome! BTW, I can actually pronounce Swinoujscie - it took a complete 4 minute's tution from my redNet mortgage agent!)

Hi Richard

I would be interested to know if you progressed this any further.

I did look at possibly selling one of my Platan units but have been advised that units in the first phase (for completion in Mar 08) are currently selling on the secondary market at around 4,700-4,900, for Black Finish and no kitchen. i.e. pretty much the same as the PS purchase price.

Regards

Alan

Hi Alan,

Well, we all (I went in with my brother and a few friends!) decided to complete - it wasn't worth it to flip. The developer seems to be selling flats at around 5,500 and rednet is offering them for around 5,700 - 5,900, although the developer does have a couple on offer for 5,000. It appears that coach loads of Poles also invested in Platan. There is definitley a bit of a glut of resales right now. We thought the best thing to so id to sit tight and wait a year or two. the gas terminal will open 2009, which will bring lots of jobs to the town. Nevertheless, I am still slightly worried that Swinoujscie is a small town and a development of 700 flats is huge and may cause oversupply in both the rental and reale markets. Also, how wealthy will employees of the gas terminal be? I don't think we'd lose money but our hopes are flat. There we are! Didn't quite work out to be the cash generator PS said it might ... but that's the way the cookie crumbles ... :)

I would be interested to learn if other folk are completing, if they're going to furnish the flats and how much they hope to get.

Cheers,

Richard

Hi Richard,

As you say there is a glut of units on the market at the moment. I tried to get a realistic view of current prices by contacting agents as both a buyer and seller. It seems that although a large number of units are advertised at 5,500PLN and others at between 4900 and 5000, you would only be likely to get a secondary market sale at around 4,700-4,900.

I have decided to complete, as selling now would incurr a very large overal loss but I am worried about the future of this development as things are clearly not progressing as predicted in the prospectus (Rereading the prospectus, PS extected a very rapid price appreciation and gave a "very conservative" estimate that prices would be at 7000 PLN well before completion).

I would appreciate comment from PS as to why the very bullish scenario painted in the prospectus has not materialised - is it just a case of hang on and it will, or time to review whether holding on makes sense.

Regards

Alan

Hi Alan,

Yes, I'd appreciate a comment too from PS. The deal was offered in April of 07 and Poland at that time (at least the 3rd tier cities) was still going very strong and the propeectus was, as you said, very bullish indeed. Poland peaked and it is very unclear where it leaves a wee town like Swinoujscie, and a large (too large I think) development in that small town. I know Poland has taken a back seat to Romania but 'done deals' are very much the concern of those who'ev already bought!

Richard

although i didn't buy in swinoujscie (and am still unsure as to how to say it) i did invest in other polish 3rd tier cities and warsaw. so similarly to the last couple of posters, i'd be interested in PS's take on why their 'conservative' forecasts of price growth during construction phases look like overestimates. see http: / /reports .rednetproperty .com /market _situation for what's actually happening.

still hope these investments may prove reasonable over the long term, but to maintain trust in PS it's important to be reassured that they admit, understand and learn from their mistakes in reading the market.

regards,
dan

Hi guys

I can give you my opinion, though you should certainly not take it as PS's 'official' response - that's one for the deal brokers, and you should contact them. Truth is, they don't have time to read and respond to every forum post.

I, on the other hand, can read more and respond with my own views!

I think, if anything, there was a misjudgement by a few months when Poland would peak for the first time. I know from reading many of the packs it wasn't expected in 2007, more like 2008. What I would say though, is that the brokers' choice of developments in Poland means that most investors will be well protected while this steadying period lasts and before the second phase of growth occurs.

I think I'm okj in saying that PS fully expect an impressive second spurt as we have seen in the Czech Republic - I can't say when. I've heard mention of six months to 18 months!

The predictions in the original IR for Swinoujscie WILL occur, I think anyway, but as I think it was Alan suggested, it'll require a wait. And as PS always advocate the long term, I reckon that's fair enough, if not ideal!

I do believe there will be that second phase of growth and that there won't be too long to wait.

Ben,

I would very much like an update from from the deal broker for Swinoujscie. I need more information about why the forecast rises have failed to materialise, before I can take a decision at whether hanging is a sensible course of action.

Can you arrange for an update, I am sure it will be of interest to all of the Platan investors so would be better handled by a response on the forum or an article than a reply just to myself.

Regards

Alan

thanks, ben
i'm also still reasonably confident for poland in the long term. but it would be interesting to know if the forecasts failed to materialise so far due to macro/interest rate reasons, or due to underestimates of new housing supply. this sort of analysis could help ensure forecasts are more accurate next time, and therefore that you can better protect PS's reputation (surely your most valuable asset).
regards,
dan

Hi Richard

To belatedly answer your question….

Having made inquiries with i-property assets the advice I was given was to complete, rent out, and sell after a couple of years. This is all very well, but I do not get a sense that there is a huge rental demand that awaits completed units (the question I asked was, if I spend £10k plus proceeding from black finish is the unit likely to rent straight away. What demand there is will most likely to be from short term holiday lets, with their associated management costs. Given that it the latest 'ready to rent' date has slipped to 1st August a fair amount of the season will have been gone.

Based on this information, and the addege that when you are in a hole - stop digging, my intentions are currently to leave as black finish, at least until it is possible to get a full seasons rent and the gas terminal opens next year. Happy to be convinced otherwise, but look to me like a sensible damage limitation exercise.

Straightforawrd question to PS. Upon completion on 1st August, realistically, what rent if any is likely to be achieved ?

To date this has been my only investment with PS and it does feel like the investment that PS forgot, or would like to forget. Earlier this year other investors shared their lack of progress with the deal lawyers in getting a date when the final payment was due - there did not appear to be any willingness to intervene in spite of PS being regularly contacted by the developer for the updates.

Will be heading out there at the end of the week to see what the place looks like, and how far construction has progressed. The last update to the building journal on the developers website was way back last summer. Now it just says "Nie mogę się połączyć z bazą!" Whatever that means

Will let you know what I find !

Rgds
Mike