PropertySecrets goes bust / into administration

For any confused Property Secrets clients the news is that on 10th August 2009 Property Secrets (and associated brands such as i-propertyassets) called in the administrators.

This is a sad end to a company that had a lot of potential and started its life with the right morals and went in the direction, until a combination of greed and bad management have seen it sorry decline.

Many clients were charged high fees and got worse than poor service, so its no wonder that most already found alternative arrangements for their properties.

Unfortunately the company leaves many employees, clients and partners owed money, and in such circumstances the prospects of getting much of it back are slim.

What the future holds for Property Secrets and their clients is uncertain. But for those who want any advice or help with their property in Central and Eastern Europe please get in touch.

www.propertyinvestmentinternational.com

Czech kitchens for property investors

I had a client contact me yesterday who had been charged 437,000 CZK for a small-sized kitchen in a mid-level development. Either the kitchen was made out of pure gold studded with diamonds or the company charging him this amount was make a healthy margin.

I don't deny that property companies have to make a profit for the work they do in designing and installing a kitchen in an investors' property.

However, what I do find questionable is:
(1) charging huge prices and telling investors that such a high standard kitchen is required, when in most cases it is not
(2) once the investor has paid for the kitchen the property company then puts in the cheapest quality materials as possible to make as much money as possible, usually with the idea that the investor doesn't really know the difference and if they do they will probably never come to the Czech Republic to see it anyway. This kind of practice is widespread an immoral.

We have recently been selling a property in a well known development in Prague 7. This investor had gone for the best quality kitchen the property company was offering, and paid over 250,000 CZK for the privilege. When we viewed the apartment the potential buyer said he would have to remove the kitchen if ever he were to buy it as it was so low quality. The cheapest materials had been used for the work surfaces and cupboards, and even plastic handles were installed - all this for 250,000 CZK!!!

Unfortunately, this is not an isolated case and is just another part of the corrupt world of property companies ripping off unsuspecting investors.

So any investors out there who need a kitchen make sure you know what quality spec you're signing up for and shop around for a quote, then hold the property company to account that what you bought was actually installed.

[the image in this blog is one example of the cheap and nasty kitchen installed in some apartments - not integrated fridge/freezer, not many cupboards, poor quality appliances, all round low quality]

www.propertyinvestmentinternational.com

Should you walk away from your deposit in Romania?

As I have both said and written in the past I believe the Romanian property market is a mess and believe it will stay like this for sometime.

I am glad I had the strength to resist the apparently quick profits available there as every property expert seemed to suggest, thus luckily I have no investments there.

But for those that have put a deposit down on a property in Romania there is a very important question many are asking themselves - should I just walk away?

Whilst this may be a very painful decision I believe that for most it will be the best option.

There are a number reasons why I believe that its better to move on than face a number of years of continued problems:

1. the Romanian property market is falling dramatically and thus it could well be a long time before you get anywhere near the purchase price for a sale of the said property
2. the Romania economy is a mess, this will not be turned around overnight and this will not help the property market
3. there has been a huge currency swing against investors meaning the remaining money to pay on a property is now larger (in one's home currency) than the original purchase price of the property - this makes the deposit less than worthless
4. the market is very oversupplied (not good for sales or rentals)
5. much of the property built in the last few years in Romania was both very poor quality and overpriced - not a good combination
6. there is still no sign of mortgages for foreigners in Romania, they are likely still to be some way off, and even when they do come in they'll be low LTV and high interest rates and expensive terms.
7. rentals are weak, the market is oversupplied, thus cashflow is likely to poor for a long time (combined with the potential for very high mortgages rates once they are available)
8. as you can't get a mortgage you'd have to pay the remainder of the purchase price in cash - i would have thought in this times there are far better returns to be had on the money than tying it up in a dud investment
9. if you do complete on the property you'll have to spend extra money on kitchens, furnishings etc
10. the ongoing hassle, time and energy spent on the investment will not be worth it, and it will require this energy every year for a number of years - not something to be underestimated.

Overall what you've got is a market where prices are falling fast, poor quality build and oversupply, a weak rental market, no resale market, no mortgage market and a poor currency.

In general I would recommend most investors just to walk away from their deposits in Romania - better to take the hit now than be faced of 5+ years of poor (negative) cashflow, having to continually subsidise a property that you can't sell (nevermind sell at the purchase price). Tough as it may be this is the reality.

Price Promise from Property Investment International

We have recently introduced a "Price Promise" to ensure that our clients are getting the best prices possible in the market.

"We guarantee to deliver you the best price possible for all of our property services and guarantee to beat the quote of any other property company."

As well as working hard to deliver first rate property investments this price promise also ensures that our clients get great prices on their kitchens, furnishings and only 9% property management fee in the Czech Republic.

Perhaps we should have called this a "value promise" as we truely offer the best value investment sourcing, completion service, kitchens & furnishings, letting & management and resale services. And it is true value that we aim to deliver to our clients across our range of services.

If anyone has a quote for one of the above property services why not drop us a line and see if we can beat it.

www.propertyinvestmentinternational.com

Czech Resale Property

One of the effects of the credit crisis has been we have seen a large increase in the numbers of investors who wish to resell their Czech property.

The Czech Resale Market

Throughout 2008 (though in particular the second half of the year) Czech property prices have slowed down from the heady growth of the previous couple of years.

Developers have had problems with their financing and combined with slowing demand on the Czech market have seen them slash prices in order to increase their sales.

Developers have been offering various discounts (up to around 10% off) and incentives such as free kitchens, free parking spaces or cash back etc etc.

Thus prices for new build property have seen some decline and this trend is only likely to continue.

Panelak prices have also seen falls as sellers have to price their properties more realistically.

Demand for Czech property has for sure dropped and with the economic outlook worsening in the Czech Republic (a country that is heavily dependent on exports - particularly to Germany that has just gone into recession) the outlook for 2009 is not pretty. I expect prices to soften further.

Many investors are seeing this as a good time to sell before the situation gets much worse and whislt the GBP/CZK exchange rate is favourable (giving around a 30-40% gain on the currency alone for investors).

How can PII help?

We are lucky to have, in our group of companies, our own local Czech real estate agency (which is a completely separate brand from Property Investment International).

We put all our resale property through our Czech agency and the results have been impressive.

We are getting investors a great price and a quick and hassle free sale (we do all the paperwork as part of the service).

For anyone interested in selling their Czech property don't hesitate to contact us to find out more about how our resale service can help.

www.propertyinvestmentinternational.com

Czech & Polish Property Management

As part of our newly introduced "price promise" we have just reduced our rates on our Czech & Polish property management services.

Our Czech property management service now just costs a crazyily low 9% of the monthly rent (+VAT) making it the cheapest property management service on the Czech property market.

Not only is our Czech property management service the cheapest on the market we believe it is also the best.

Our service is completely hands-off, which is quite unusual on the Czech market. Allow me to explain ...

Most Czech property management services still require you to check that you've received the rent every month, pay your own community charges and pay all other utility bills (such as electricity) and deal with all the paperwork involved in running a property - we, however, do all this for you!

This effectively means that, after the initial set-up of the service, all you have to do as an investor is sit back and watch the money come into your bank account every month and take a look at our regular property management statement report should you wish to.

We keep a detailed log of all incoming and outgoing related to your property so that you can see exactly what is going on every month and makes any tax payments a straightforward proceedure.

Our head office is based in Prague giving us vital on the ground presence, knowledge and expertise. We have a great team in place who sort out any problems immediately and answer investors queries promptly.

We also provide the same property management services in Poland.

Simply contact us to give our property management service a try.

Prague Property Management Czech Republic

Our property management service in Prague (Czech Republic) is proving extremely popular.

Now that there are a number of new off-plan developments completing in 2008 demand for a cost effective property management service in Prague and other cities in the Czech Republic such as Brno, Ostrava and Hradec Kralove is very high.

We only charge 10% + VAT of the rent per month for a complete hands-off service where we look after all aspects of managing the property even including making sure all the necessary bills and service charges are paid and all communication with the tenant not to mention monthly accountancy.

We are the lowest cost provider on the Czech market for property management, yet we deliver the highest level of service a one which is truely hands-off - all you have to do is check your report which we send you once a month.

As well as property management our local Czech real estate agency facilitates all the lettings and resales, thus providing a complete packages of property services for investors in Prague and the Czech Republic.

Please get in touch if you have a property in Prague or other cities in the Czech Republic to find out more about our unique Czech property management service.

www.propertyinvestmentinternational.com

EU Cards in Czech Republic

We have long been the cheapest provider on the market aiding foreigner property investors to get EU cards in the Czech Republic.

However, is soon expected (ie early 2009) that the Czech Republic, after a 5 year grace period, will comply with the EU regulations and remove the necessity for foreigners to obtain an EU card or set up a company to be able to buy property in the Czech Republic.

This will mean even cheaper transaction costs and less hassle when buying property in the Czech Republic, hence it is a good thing.

The restrictions on foreigners owning Czech agricultural land will remain place for another 2 years however.

Theoretically, if the restrictions are scrapped, only foreign property investors completely on off-plan units in the next few months will need an EU card. If you find yourself in this position please contact us for more information.

www.propertyinvestmentinternational.com

Which countries in Central & Eastern Europe could be most affected by the Credit Crisis

Iceland's economic and banking woes have been splashed all across the news in the last couple of weeks, and quite rightly too as the situation is a mess (but a great/cheap opportunity to travel there as their currency has been hammered).

In light of the crisis in Iceland I thought I'd take a look at which countries in Central and Eastern Europe are the most at risk in going the same way, and thus which property markets you may want to avoid.

Starting with the worst first, in order:
1. The Baltics (Estonia, Latvia and Lithuania)
2. Hungary
3. Romania
4. Bulgaria

The Baltics in particular have had a huge property bubble that has been busting for a while now, the banks have tried to tighten up lending but they've been a little late and their actions have only speeded up the demise of the housing market. These are small and vunerable economies that have grown too quickly over the last 5 years and have not done enough to temper and sustain some of this growth.

Hungary has been a mess for a while, their economy just never did perform as well as some of their neighbours and the political malaise does not help. The Hungarian property market has not even seen some of the price growth that the Baltics countries have, and has poor mortgage finance for foreigners. Much of the nations mortgage borrowing has been in Swiss Francs leading to huge currency risks that could see people unable to afford their repayments if the exchange swing against them. Only recently has the Hungary started to impose restricts on this kind of lending, again too late.

Romania is another candidate for an economic mess. High, but unsustainable, growth and wild policies by the government that has tried to grow the economy too quickly. This has led to huge risks that the economy could falter. Mortgage lending to foreigners has never been very good and now has been stopped by the national bank pending a review. Romania is not a place I'd want to invest at the moment.

Bulgaria follows similar lines to Romania, though perhaps not as accute. Though their banks have only just recently started to tighten up their lending practices on the heavily over-inflated priced property on the beach and in the ski resorts. Time will tell as to how their banking sector will fair.

The other country I might mention in this list would be Ukraine, whilst not in the EU there are still similar banking and property sector risks as described above.

The Czech Republic, Poland and Slovakia should fair a lot better. Although I see their economic growth rates slowing, both their economies and property markets are more robust.

The world is definitely changing and no-one really knows how things will develop over the next year, but one thing is for sure now is a good time to have money in safe solid assets and cash ready for the opportunities that will abound when the world once again settles down.

www.propertyinvestmentinternational.com

Nigerian property and land

The Nigerian property market is not something I normally write about, but as I try to keep my eye on as many of the world's property markets as possible I thought it would worth mentioning some interesting facts about whats taking place in the Nigerian property market.

A land reform act passed in 1978 gives the Nigerian government ultimate ownership and thus control over most of the countries land.

Under this act the Nigerian government owns almost 95% of the nations land, with much of the remaining 5% being untitled.

The population of Nigeria is around 140 million people, a figure which is expected to double by 2050.

In the capital, Lagos, the population is expected to increase from the current 15 million to 23 million people in only the next 5 years!

With such huge increases in population demand for property and land is very high in Nigeria and is on the increase.

With such demand for land there is unfortunately a huge abuse of power taking place, as it does in many countries but particularly in Africa.

People who have invested their life savings and work into building their own home are now seeing them being ripped down by the government. Huge swathes of the city are being cleared to make way for new developments.

The government is selling the land at a huge profits to developers. These developers then build new homes, many of which are priced in the million dollar plus range, and also make huge profits.

Whilst this is good business for the government and developers is a human rights tragedy.

Reforms of the land laws and the introduction of western style mortgages have been expected for sometime but are slow to materialise.

In the short term things are unlikely to get better. Demand for housing and land is only going to increase as is the greed of those in power.

The rental market similarly has huge demand, often tenants need to be able to come up with 3 years rent in advance just to rent a home.

I'm a big fan of investing in cities with increasing populations (though particularly in more developed nations) and with the demographic changes taking place in Nigeria it could be a great place to invest if one can get secure title on the land and has family connections in the country.

That said, I feel the Nigeria is a little risky for me and I'll concentrate more on my day job of Central and Eastern European property.

www.propertyinvestmentinternational.com