Slovakia Investment Property

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Slovakia Investment Property Newsletter
June 2006 - Issue # 21
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Following our overview of Slovakia's retail and office
markets, in this issue you will learn about the fast
growing logistics-industrial segment, the main areas of
importance and implications on commercial land prices.

And, as patience pays off eventually, we have a great news
for all those who have been waiting for our new project
in central Bratislava over the last few months. With release
scheduled for next month, the summer will bring you more
excitement than just beautiful warm days and clear skies!

As usual, in case you've missed any of our previous
newsletters, they are available for you here:

www.slovakiainvestmentproperty.com/newsletters.php

In this issue you will find:

1. Slovakia: Host of 2011 Ice Hockey World Championship
2. New Logistics Power in Central Europe
3. Rare & Unique: New Flats in Central Bratislava!
4. Tell Us What You Think!

===================== FEATURE EDITORIAL =================

1) Slovakia: Host of 2011 Ice Hockey World Championship

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Slovakia has been selected to stage the 2011 World Championship
following a vote by the International Ice Hockey Federation
and beating bids of Sweden, Finland and Hungary.

Since the split from the Czech republic Slovakia has emerged
as a hockey power, winning gold in 2002, silver in 2000 and
bronze in 2003.

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2) New Logistics Power in Central Europe

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One of the fastest growing segments of Slovakia's property
market in the last three years have been logistics.

While until 2002 the only capacities were represented by low
quality space in areas such as the old industrial zones of
Bratislava, change came with the industrial growth in 2003
and the EU entry a year later.

Tens of thousands of square metres of new warehouses are
springing up each year to meet growing demand. Main locations
are along the D1 highway from Bratislava (direction Trnava)
and in the proximity of Bratislava airport. Increasingly
locations around Zilina are becoming important due to the
KIA automotive plant.

Slovakia is fast entering international logistics and
distribution networks, as witnessed by massive warehouse
facilities of nearly all European supermarket chains as well
as other more or less familiar names built all along the D1 highway.

While until recently most warehouses were built for a specific
client, more and more facilities are now starting to be built
speculatively as a rent-out model - with variable interiors
to accomodate needs of future tenants.

The # 1 logistics destination is the area around Senec, near
Bratislava and the D1 highway. Following last two years'
projects by developers Parkridge (90,000 m2 of rentable area),
IPEC & UBM (Senec Logistics Center, 45,000 m2), the newest
multipurpose park Senec Cargo Center will also deliver
office and residential space. The 250 million euro investment
will be developed by Slovak IPEC Group.

Another Senec area project, Bratislava Logistics Park (by
the Karimpol Group) offers 65,000 m2 of rentable area that
can be increased by a further 300,000 m2 in the future.

Proximity of Bratislava, excellent highway access and
availability of modern high quality facilities at the price
of low standard, old warehouses in Bratislava have made
Senec into Slovakia's logistics hotspot.

Near Lozorno, 12 km NW of the capital and next to D2 highway,
the Westpoint D2 Distribution Park is under construction.
The investor (Merril Lynch) is putting 37 million euro into
the project, to be built in four stages over three years.

The largest Slovak real estate transaction also involved
logistics-industrial parks. 300,000 m2 of J&T's 4 logistics
parks (as well as the office block Westend Tower and options
on future industrial sites) were bought by the french AXA
Group for 250 million euro. The four parks include the Trnava
Suppliers' Park for PSA Peugeot-Citroen (Slovakia's largest
with 180,000 m2; 108 million euro investment), the DNV Logistics
Park (Devinska Nova Ves, north Bratislava) next to the VW car
plant and industrial parks in Nitra and Dubnica nad Vahom.

HB Reavis, one of Slovakia's largest developers, stays with
speculative projects. After its successful multipurpose Raca
Logistics Centre in Bratislava's Raca area (BA III; 66,000 m2
of rentable storage, light manufacturing and office area) the
company is building the 36,000 m2 Svaty Jur Logistics Park,
6 km north-east of the capital.

J&T, IPEC and HB Reavis are Slovakia's largest commercial
developers, accounting for most of the country's industrial
developments (in some cases in joint-venture with a foreign
partner).

While most logistics sites are concentrated around Bratislava,
the city itself also offers two areas attractive for this
segment. The already mentioned Raca Logistics Park benefits
from its good connectivity to the highway. The other location,
Kopcianska street in Petrzalka (BA V) - as one of the city's
least attractive locations unsuitable for any other segment
of the real estate market - has been used for warehouse
facilities thanks to its excellent access to Austria.

Rents for warehouses in western Slovakia range from 3-5 euro/
m2/month for highest quality space down to 1.5 euro/m2/month
for older, less attractive facilities. Land prices in
industrial zones in the Bratislava area are 30-100 euro/m2.
High demand for land along the highway has resulted in fast
price growth of parcels suitable for industrial development.

Although the logistics segment is mainly concentrated in
western Slovakia (Bratislava, Trnava, Nitra, Trencin and
increasingly also Zilina region), central and eastern
Slovakia have also seen construction of several industrial
parks, the most notable being the eastern parks in Kechnec,
Michalovce, Humenne and Strazske.

Slovakia deems an industrial park to be a project of regional
or national importance that involves unified lands of at least
10 hectares size, with legally clear ownership and provided
with engineering networks and transport infrastructure.

Main problems are the difficulty of buying up land (which in
Slovakia is split into very small parcels, meaning investors
have to deal with hundreds and even thousands of individual
owners - provided they can be identified in the first place)
and, outside western Slovakia, also lacking infrastructure.

Creation of industrial parks can be initiated by municipality,
region, or private company/investor. State (Ministry of Economy)
and EU (Structural Funds) aid for building infrastructure can
only be awarded to municipalities. In such cases a traditional
model usually involves 70% from the EU, 25% from the Min of
Economy and 5% from the municipality itself.

FUTURE
------

Strategic location in the centre of Europe, proximity to the
massive markets of Ukraine and Russia, high industrial growth
based mainly on the automotive sector, skilled and educated
yet low cost workforce are the main advantages that will
ensure further expansion of the logistics segment in Slovakia.

In the long term, an area that should see surging demand is
the zone near the border with Ukraine. With the Shengen
agreement this eastern border of the EU will be increasingly
attractive for logistics and distribution facilities. The
severe infrastructure problems (the highway will only come to
the eastern city of Kosice in 10-14 years) will be partially
eased by an opportunity to access the European transport
network through Hungarian motorways in the south-east.

Therefore, logistics development is a chance for this region
that, due to high unemployment and extremely low purchasing
power is not going to see much activity in any of the other
real estate segments for at least the next decade.

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3) Rare & Unique: New Flats in Central Bratislava!

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As many of you will know, we have, for the last 5 months,
been preparing a fantastic new project in an unmatched
location on the border of the city centre (Old Town).

As with all our opportunities, we only release a new project
once we have arranged all the safeguards and guarantees
ensuring our clients' investment is 100% protected.

That is why our clients have always benefited from better
payment structure on off-plan purchases (no staged payments
as typical in Slovakia), far more favourable contracts,
and, importantly, full bank guarantees on the paid deposit.
Bank guarantees are not used for residential projects in
Slovakia, and take a huge amount of time (several months),
work and effort to negotiate (often including giving
guarantees on our end to the developers).

This explains why no other company has ever been able to
offer such product to their clients, leaving them fully
exposed when handing over their deposits and staged payments.

Once again we have now reached the stage where not only
has the second and final planning permit been issued,
but also a safety structure has been set up for our
investors' protection. We are now arranging final floor
plans and last details, paving the way for a July release.

So, for those of you who are not yet aware of our newest
project ... why does this small 20-unit development represent
such a fantastic investment opportunity?

As usual, its location, location, location!

If you are already familiar with Bratislava, you will know
that the area to invest if you are looking for a realistic
chance to rent your property out is the city centre.
However, Bratislava's centre (BA I district, Old Town)
is a historic area with no new developments available.

While classic Old Town flats are easy to let, the
same cannot be said for properties outside the centre.
Unfortunately for investors with preferences for new
builds, new developments are not located within walking
distance from the sought-after BA I area and as a result
are unpopular with foreign and company tenants (leaving
students and low income workers as a tenant option -
at very low rents).

You can now understand why we've invested massive
time & work into this tiny project:

With its position on the border of BA I and BA II
- 5 minutes walk to the Old Town - it benefits from
an unmatched location, with no other new development
available in such close city centre distance!

Yet, although in a highly sought-after location, the
area will also shortly receive a further extraordinary
uplift, which is sure to have an effect on property
prices in the vicinity.

The development is just 300 yards from the massive new
City Business Centre that is currently being built on
Karadzicova street. This high spec commercial development
will transform Karadzicova - the avenue forming the
divide between the Old Town and the BA II district -
and finally give the entry into Bratislava's centre
a new, modern metropolitan look.

The last of the 4 blocks of the CBC will also include
residential units, with prices to be in the region
of 2,000 GBP/m2. These will be the only new built
apartments in the area (by 2008), apart from our
small block!

What's more, the main bus terminal (3 minutes walk from
our development) will also be completely redeveloped
over the next 2-3 years and transformed into a top-end
hotel, shopping mall and high-tech terminal. The works
will be undertaken by HB Reavis, Slovakia's top commercial
developer who is also delivering the City Business Centre.

Now, the best news at last - the prices for our high
quality apartments are extremely competitive for the
area - at just 1,200 GBP/m2 - including VAT!

One and two bed apartments range from 50 to over 100 m2,
and completion is expected in late 2007.

If you are looking for a quality new built property,
yet one you can rent out (both long and short term)
at reasonable yields (7% p.a. in the current market),
you will not find any other project in Bratislava that
can stand comparison!

If you have registered interest, you will receive a
full information pack a week prior to release. Reservations
will be taken on strictly first come first serve basis.
Over 500 clients have registered for this deal already,
and we expect the units to be sold within a day or two.
Please understand you will need to be quick in your
decisions. You will have one week to make up your mind
after receiving the information pack, before reservations
are open.

In case you haven't done so yet, you can register your
interest by sending an email to:
info@slovakiainvestmentproperty.com

* * *

Those of you looking for holiday homes or holiday let
investments ... you will be pleased to hear we will soon
be releasing beautiful houses (chalets) in Slovakia's #1
tourist area, Liptov. Only 9 homes will be available, in
a fantastic location near 2 Aquaparks, a popular lake as
well as Central Europe's largest ski resort Jasna. Prices
for 2-bedroom houses over two floors, including land plot
and VAT start at under 85k GBP! Release expected in 30 days.

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4) Tell Us What You Think!

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We would love to hear what you think of this issue of our
newsletter. We hope you find the information useful and
wish you best success in your investment activities.
And of course, if you have any suggestions for upcoming
issues that you'd like to share with us, please send them!

Just e-mail us at: contact@slovakiainvestmentproperty.com

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We are looking forward to seeing you next month. In the
meantime, if you have any questions or would like to
request further information, please contact us at
info@slovakiainvestmentproperty.com or at
+44 (0)207 152 4014.

Best of success,

Petra Gajdosikova
Managing Director
Slovakia Investment Property
www.slovakiainvestmentproperty.com

Slovakia Investment Property is a trading name of
Alpha Real Estate Investments Limited