Investment Property - Cubicon

Original Investment Summary - 28/02/2008 Investment Property Cubicon

Average 21% below market value according to an independent valuation by Colliers International.
A new landmark development in the emerging Mlynská Dolina district in Slovakia’s dynamic capital, Bratislava
3% discount off the developer’s list price, saving an average £3,251 (including VAT).
15/ 85 payment terms - the best available in Slovakia.
Pivotal location less than ½ a kilometre from the new Vienna to Bratislava motorway (D2)
A landmark development next to the Slovak TV headquarters and the Bratislava Comenius University campus, Slovakia’s oldest and largest university.

Bratislava, after a period of quiet capital growth, is now set to become one of the best investment locations in Europe on the back of Slovakia’s strong economic performance.

Cubicon is an exciting new mixed-use development in Slovakia’s capital, incorporating a retail, office and leisure facilities. Cubicon will be a landmark development in this area of the city close to the new D2 motorway (completed December 2007) linking Bratislava to Vienna, Brno and Prague.

The building will be constructed using top quality materials with the commercial section clad in reinforced glass. The residential apartments are built around an inner yard where the aim is to make full use of natural light. The apartments themselves will feature winter gardens (sun rooms) as well as balconies and terraces with an underground parking space included in the price with each unit.

Bratislava is at the hub of the country’s booming economy which registered 9% GDP in 2007, one of the highest levels in Europe. Cubicon will be the first of a new generation of buildings with a modern functional design in the Mlynska Dolina area of the city the home of Bratislava’s oldest and largest university.

Bratislava has experienced an unprecedented boom in the construction of new housing in the city mainly in the form of luxury apartments with a host of major developers moving in to satisfy demand. However developers are now beginning to focus attention on the mid market sector in areas outside the city centre. We anticipate that Bratislava will follow the Prague pattern of development with a minimum 20% growth in prices in the next 12 months.

Cubicon is aimed at the mid-market on the edge of the city within just ½ a kilometre of all the main routes both into and out of the city. The average price per square metre of the apartments is £1423 / SKK63,193 against an independent valuation of £1,800/ SKK80,000 psm placing the units at 21% below market value. This is a key attraction of the deal as it is rare to get above 15% below market investments in the booming markets of Central and Eastern Europe.

With prices anticipated to rise by 20%, this could potentially give a 26% return on investment prior to completion with exchange deposits starting from £14,744. Prices start from £98,294 / SKK4,366,213 (incl. parking storage and VAT) which is an excellent price for a development of this kind in the capital of Slovakia and an emerging major European city.

The payment terms have been negotiated down from 30%/70% to 15%/85% which are currently the best available on the Slovak market where multi-staged payments are the norm. There is also an average 3% discount of the developer’s list price. With up to 90% LTV now available in this rapidly developing market (subject to status), now is an excellent time to enter the market in Slovakia’s booming capital city.

There is current lack of commercial space in Mlynska Dolina, therefore Cubicon represents a unique opportunity to enter the market at a very early stage as the area continues to develop into a key commercial area of the city.

Commercial space in turn drives demand for residential dwellings. The development will be constructed next to the Slovak TV headquarters and the Comenius University campus which lie at the heart of Bratislava IV on the outskirts of the city. Property prices here are currently less than for an equivalent property in Bratislava I to III owing to the current lack of new development. Property prices in the centre of the city are now approaching a ceiling in the luxury sector, therefore developers are moving to the edge of the city targeting the more lucrative mid-market sector and the rise in the emerging middle classes.

Cubicon lies within an easily commutable distance of the city centre and even, Vienna, at just 31 miles away, on the D2 motorway. These two cities are the closest capitals geographically in the world, yet Vienna is up to 4 times the price of Bratislava. This will not always be the case.

The development will include 175 apartments ranging in size from 55 to 255 square metres. The average size of the 30 Property Secrets units on this development is 61 square metres. This falls well within the size range of between 50 and 65 sqm which we have recently identified as most in demand in Bratislava among young professionals looking to live in the city.