Nice post Neil.

I appreciate Propertysecrets critical analysis, something you don't see with any other agent out there.

Basing the company on analysis rather than sales is the differentiator. I wouldn't touch most of the companies who sell on a load of inflated promises.

Which other companies ever produced an independent valuation of their sale properties as PS did with their CEE investments ???

I nearly overpaid in CEE significantly against the local price through another un-named agent.

The timing of some of PS's CEE developments may have been poor in relation to the ensuing credit crunch but at least the prices were true market prices (or discounted)at the time. Selling on a fee basis instead of taking a large cut from the developer is the only way to sell property and PS had this spot on.

l) We have almost always taken a long-term view on performance and we still do. Long term your CEE investments will nearly all outperform the UK - but yes, the ride is a lot more scary than any of us imagined. Sorry for that - perhaps we should have been more careful to have warned investors that making money in high growth market takes a cool head.

Agree. I think some of the CEE critics overstretched themselves and expected far too quick a return. Why purchase in a foreign country at high purchase costs unless you have a minimum 15-20 year investment horizon??? Over this sort of period the key PS markets of Poland, Czech & Slovakia will do very well.

Neil - When will PS start looking at CEE again? I think that within 18-24 months there will be some excellent value out there. I for one will be looking at Poland again. I would like PS to provide a bit more information on opportunities and the deposit % now required for foreign purchasers (if they are even offering foreigners mortgages).

Cheers.

Tom, I think you are being very generous in your assesment of the article. For me it tries to gloss over serious failings in the PS service. These include, with an example of each from my Polish investments

The level of market analysis has been very superficial, with many of the conclusions drawn from the analysis proving incorrect.

- archic planning laws will prevent oversupply of property occuring in the next 10-15 years (this claim was the in part the reason I invested in Poland, oversupply occured within two years)

The performance of investments, in terms of capital appreciation has been overstated

- price updates proved to be highly misleading, based upon nothing more than developer list prices (probably the worst example was Pelikan here it was claimed to have increased in value by 122%, when I investigated selling my units I found the reality was between 20-30%. I pointed this and other similar errors to PS staff inlate 2007, exchanging numerous posts about the huge discrepancies between their claims and reality, but the staff I dealt with seemed to have little real knowledge of the market and left the claims on the website for almost a year).

The quoted figures for rental yield ignore so many costs as to be misleading

- net rentals figures proved grossly optimistic (my 3 Polish PS apartments,are currently returning around 0.5% gross -4% net, together they require over £14,000 per year of ongoing funding. To give an idea of how misleading the quoted figures are, my apartments were included in the recent PS rental report, as returning between 5-6%)



Overall out of the 7 PS deals I invested in, I have proceeded with 4 and am extracting myself from 3. This has cost around 50k in lost fees and deposits, but proceeding would already have led to a much greater loss, as the current market prices of the unitsI decided not to proceed with are now way below my original purchase price.

i.e. Platan units are on sale for around 50% of the Sterling purchase price
Pallady - unsold units have been reduced by 30% but still not selling

I think PS are still in denial about the prospects for the CEE markets, the effects of the credit crunch have only just started to be felt in many of these countries (The IMF recently estimated that CEE banks have so far only admitted to around 15% of their losses) and property prices are already much higher relative to income than in Western Europe.

Anyone with investments in Romania, Slovakia or Bulgaria would be well advised to do some research of their own before deciding how to proceed. The link below gives some up to date information on these markets:

http: / /danskeresearch .danskebank .com /link /CEE150509 / /CEE _150509 .pdf

The link above doesn't work because the editor removeds some text when I post it

http: / /danskeresearch .danskebank .com /link /CEE150509/ $file/CEE_150509.pdf

If you use the above removing the space before the $ it should work.

Regards

Alan

interesting report, alan, thanks. not encouraging, though at least poland still seems to be the strongest outpost in CEE.

i'm afraid i lean more towards your assessment of neil's article than to tom's, with the assessment backed up by some similar personal losses.

to be fair, in PS's defence i do think:
- the credit crunch was not something property analysts could be expected to foresee, even if over-supply certainly was.
- they steered their investors away from several early dogs: hungary, baltics (after a short period), beach property (similar)
- they were (and remain) more professional than almost all other property sales outfits.

i still think that there is an incentive problem with the business model used. PS would make approx 5% per unit sale, however the unit performs. a typical hedge fund, in comparison, will take 15% of your actual profit. clearly there's greater pressure on the hedge fund to find profitable investments for clients. of course there are some other more subjective pressures on PS to keep us happy (fewer irate phonecalls, easier future sales). but, assuming you are partnered with someone with expertise, i find shared risk (and reward) more reassuring.

regards,
dan

This is an interesting view from KPMG.

http: / /www .cbw .cz /en /article /waldejensenfive -years -till -recovery .aspx

Neil

Another post that for me is too general - I think investors would want to hear about all of the points you make in relation to their own developments they have invested in.

I will take issue though with your assertion that you planned for the slow down in growth - your projected spreadsheets had heavy periods of capital growth over 5 years + that were deterministic rather than stochastic.

Aswell as focussing on investment opportunities now for all those with capital to invest what about existing investors who are now holding those investments from 2006-2008 in particular?

Specifically:

a) Those who paid for LCS had a post investment strategy report - I think its time that a new up to date report is issued for every development.

b) Time taken to respond to e-mails/forum posts/queries is too long ( I have to question the resourcing at IPA).

c) Backing up the assertions made in the marketing brochure with reality now

eg if you said there were 10,000 jobs that were being created what is the number now?


In essence, I'm looking for an up to date reappraisal of the information provided at the time of purchase and a much stronger and quicker support offering from IPA.


Sanj