Polish property developer JW Construction, has signed a letter of intent with a Russian partner with a view to future co-operation in buying and developing land in the Russian Federation, in particular in the region around the Black Sea coast and the town of Sochi.
Its partner in the venture is a Russian citizen with knowledge and experience of the local market who also owns two firms possessing 5.3 hectares of real estate in Sochi. Co-operation will primarily centre on commercial undertakings, but the Russian partner will also seek land for housing and retail investments.
The joint venture will begin with the launch of two development projects. The first is a housing-office complex in downtown Sochi, which will provide total useable space of more than 40,000sqm. According to the developer, construction work could get underway as early as the first quarter of 2008 and will take approximately two years to complete. The second project is a housing estate consisting of around 1,000 flats in nine buildings and with a total floor area of more than 70,000sqm.
JW Construction will have a two-thirds share in both projects. Its Russian partner (whose identity has not been disclosed) will contribute land to the special-purpose companies responsible for carrying out the investments, while the developer itself will put up almost $23m in capital.
The gross profit from both projects may exceed $300m, according to JW Construction calculations. The company reportedly said that flat prices in Sochi are currently around $4,000sqm and will probably go up prior to the 2014 Winter Olympics, which the town is hosting.
House price rises unlikely to continue in Eastern Europe says EBRD
Fast paced house price growth in post-Communist Europe is probably unsustainable and prices could moderate as global borrowing conditions become tighter, the European Bank for Reconstruction and Development (EBRD) said last week in its Transitional Report. It added that an improvement in housing supply could also temper price growth, and warned that any major declines could have a significant economic impact.
‘On the basis of income levels in 2006, house prices appear on the high side in a few capitals. However, the speed of price increases in recent years looks unsustainable in many countries as continued growth would soon lead to overvaluation’, the report said.
Although the level of debt in relation to gross domestic product is still low on average in the transition region, the bank said a lack of other household financial wealth that could act as a buffer to sustain consumption ‘is a cause for concern.’
It added that real price increases have been the highest in Ukraine, followed by Romania, Latvia, Estonia, Lithuania, Bulgaria, Russia, and Armenia, running at an average annual growth rate of more than 20%, well above real GDP growth.
The report said the persistent period of increasing house prices has fuelled expectations of potential capital gains, leading to increased speculation. ‘In Kazakhstan and Ukraine, for instance, there are signs that many residents have been investing in apartments with the sole purpose of selling them on in order to generate a profit’, the report said, concluding, ‘how households react to larger declines in house prices, leading to negative equity, is largely untested in the transition region and so there may be a significant impact on the real economy.’
Prices of new build flats in Krakow decrease
Prices of new flats in Krakow, Poland, decreased by 1.28% in October, meaning they now stand on average at PLN 7,500 ( €2,060) per square meter.
This was the fifth month in a row where prices have fallen in the city. However, the downward trend varies from 0.04% in June to 2% in August, according to Rednet. Developers believe that the decline in property values is due to the appearance on the housing market of flats in less attractive locations, which means they are cheaper. In their opinion, this does not translate into a real reduction in prices of flats currently under construction.
Prices of flats in Krakow stabilised in Q3 2007, according to Rednet. Since the beginning of 2007, average prices in Krakow have only climbed by 6%.
HMMC increases its basic capital by €140m
Carmaker Hyundai Motor Manufacturing Czech (HMMC) is building a new factory in Nosovice, North Moravia, which will increase its basic capital by €140m to make a total basic capital of €160m.
A gradual increase of HMMC’s basic capital will finance the first European factory of HMMC’s parent company, South Korea-based Hyundai Motor Company. HMMC
HMMC invested more than Kč1.5bn during its first year of operation in the Czech Republic. The total investment should exceed Kč31bn. Trial production is planned for September 2008, and batch production should start in March 2009. The factory's initial capacity should be 200,000 cars a year, but should reach 300,000 by 2011.
Worldwide News
Property boom slowing in New Zealand
The property boom in New Zealand is reported to be slowing down with two sets of data showing falling prices and flagging buyer confidence.
Figures released by Quotable Value show higher interest rates and cautious buyers are behind a slowing property market for the second consecutive month. The Real Estate Institute reported a big fall in the annual rate of growth in prices and fewer house sales. Nationally, price growth had fallen to 8% for the year to October, compared with 12% to September, said president Murray Cleland.
Most banking economists predict a soft landing for the sector and prices flattening, rather than plummeting. The Bank of New Zealand (BNZ) chief economist Tony Alexander said a survey of 27 real estate professionals found overwhelmingly pessimistic sentiments. When asked about the market outlook, only six respondents were positive. Nineteen were negative and two were neutral. One Auckland agency said sales volumes were the lowest for seven years.
All the main cities reported easing growth in property values, with the exception of Hamilton, where annual growth increased to 16% from 14% in September. The national average for house sales increased slightly to $406,176 (£147,000).
Rich Venezuelans moving to Panama
Wealthy Venezuelans are moving to Panama in increasing numbers and snapping up luxury homes as they fear their leftist President Hugo Chavez will hold onto power for life and rebuild the country in the image of Communist Cuba.
Panama is starting to rival Miami as a centre for Venezuelan expatriates, who are attracted by the Central American country’s booming economy and familiar culture. The exodus has been compounded since Chavez began pushing for constitutional changes that would scrap presidential term limits.
Panamanian government statistics show a surge in Venezuelans entering the country, and one Venezuelan expatriate group estimated about 15,000 of them have settled in Panama over the past 12 months, while according to Panama’s migration authorities, some 10,000 more Venezuelans came to Panama in the first eight months of this year than during the whole of last year. Many come on tourist cards but end up staying.
Separated by a two-hour flight across the southern Caribbean, Panama and Venezuela have close cultural and historical ties. Both were part of Greater Colombia - the republic founded in the 19th century by Simon Bolivar, who led the South American fight for independence from Spain.
For Panama, the influx of wealthy Venezuelans has helped fuel a real estate boom that has been a big factor in the economy’s growth rate this year of over 9%. Real estate salesman Jorge Blaisdell is reportedly selling 500 houses on the outskirts of Panama City priced at $300-800,000, and they are being extensively advertised in Venezuela.
“Some 80 percent of our clients are foreigners, and 75 percent of them are Venezuelan” said Blaisdell.
Iran attracted $901m FDI in 2006
Iran has attracted $901m of foreign direct investment (FDI) in 2006, according to the annual World Investment Report by UNCTAD.
The figure shows inward FDI grew in the country by three-fold compared to $360m in 2005.
The United Nations Conference on Trade and Development (UNCTAD) ranked Iran 133 rd among the world's 141 countries and ninth among 14 Middle Eastern states in terms of attracting foreign investment. Iran's inward FDI was recorded at $5.4bn during 1990-2006.
The country has also invested $386m abroad in 2006 to be placed at sixth place in outward FDI. The figure showed a $60m decline to $425m in 2005.
Vietnam expected to attracted $14.5bn FDI in 2008
Vietnam is expected to attract foreign direct investment (FDI) of $14.5bn in 2008, which is up from $13bn in 2007 and $10.2bn in 2006, according to local newspaper Pioneer.
The country’s foreign invested sector is set to reap turnovers of nearly $38.8bn next year, compared with the anticipated approximate returns of this year ($32.3bn).
According to Phan Huu Thang, head of the Foreign Investment Agency under the Vietnamese Ministry of Planning and Investment, Vietnam encourages more FDI in big projects, hi-tech ones, and those on producing items with high competitiveness in 2008.
In the first nine months of this year, the country attracted $9.6bn of FDI, up by 38% over the same period last year. By 22 August, Vietnam had attracted 7,826 FDI projects with a total registered capital of nearly $71.5bn.
