PANORAMA GARDENS RESIDENCE UPDATE Exclusively available from International Brokers High Income Investment
View from Panorama Gardens towards the Airport and Cluj Dear Investor, The Avantis Wealth team visited the Panorama Gardens site at Apahida, Romania on 8th-10th May 2014. This visit included existing and potential investors. The purpose of this update is to provide prospective investors with current information and to give a broader feel of the development as it progresses. This information is not complete and should be read in conjunction with the Panorama Gardens fact sheet and Investment Guide. The group With kind regards, Rod Thomas BSc FCA, Managing Director Avantis Wealth Ltd. Group inspecting the Panorama Gardens site Phase High Two Income Investment
Growing population in Cluj Napoca In the last few days the official population statistics for Cluj have been updated. The city now has a population of c. 700,000 people. Back in 2009, just 5 years ago, the population was running at c. 570,000. This is an incredible growth of 130,000 people, or 23% in 5 years. Put another way, with an average of three people to one property, this is a need for 43,000 new properties, some 8,600 annually! No surprise then that there is a huge amount of new construction happening inside and outside the city. This underlines one fundamental strength of Panorama Gardens. The success of sales is due to the growing and unfilled demand from the local population. Foreign direct investment Foreign direct investment continues apace. We were invited to the formal opening at 3pm on Friday 9th May of the new Bosch factory, in the Jucu industrial estate and just 5km from Panorama Gardens. Sadly our schedule couldn t fit it in. We understand that Bosch have employed 500 staff, and are interviewing for a further 400. Thus the factory will have almost 1,000 staff making car parts. This is a good indication of the continuing foreign direct investment (FDI) in the local area, which leads the way in the whole of Romania as an attractive location for FDI. Property valuation way above selling price Our Romanian partners commissioned an independent property valuation to give us an indication of the completed house values. The valuation is between 110,000 and 125,000. This shows the exceptional value being offered to buyers as we will sell properties in Phase 1 at average of 80,000, or about 30% below comparables. Phase 2 sales will reflect an average price of 90,000 per house. Lack of competition There is still no competition for Panorama Gardens anywhere in Cluj. The main developers remain focused on high rise apartment blocks in the city, and the small developers are building one off houses for their clients. This is good news because it means that Panorama Gardens remains a unique proposition in the local market. In the Investment Guide I refer to Omnia residence just 300m away, which is continuing to grow as a development. On this visit they are extending their townhouses and building more. They are also building another block of apartments, which now means a total of 7 blocks of 8 apartments built and sold. Omnia is not a gated community, has no children s park, the houses are smaller and not detached. Finally the price psm is a little higher than Panorama Gardens on a sq m basis. And yet the properties are selling as fast as they build! Site progress The site was closed for the winter shutdown and only reopened a short few weeks ago. Therefore this was never going to be a visit to see huge progress. The site is, however, poised for significant progress over the coming months. Infrastructure and tarmac The infrastructure was due to be fully complete by now, but two items are outstanding, the gas pipes and the road Phase Two
tarmac. The two are linked. Originally the gas company were going to charge a considerable amount to lay the pipes. However, when they were advised that the site was going to be extended into Phase 2, with an increase in the number of houses from 56 to 138, they changed their view. Our Romanian partners have been negotiating for either a free, or very much reduced cost installation of gas pipes, thus saving considerable money. The negotiations are almost finished and over the next 4 weeks or so the necessary paperwork (a real pain in Romania) will be signed. The gas pipes then need to be laid, prior to the tarmac going down. We don t want to lay tarmac and a few weeks later dig up the road or pavement. The delay in finishing the road is holding up the signature of a number of sales contracts, so this is a key piece to unlock the sales that are awaiting contractual agreement. Our best estimate is for the tarmac to be laid in about 8 weeks time, in July. In the meantime we will start construction of more houses to keep the project moving. Improved house specification Originally the specification called for a metal roof which is normal on most houses in Romania. However our partners have agreed an exceptional deal and we are upgrading to a tiled roof. This makes a considerable difference to the perception of quality. We are also upgrading to triple glazing from double glazing, which increases the insulation values and reduces heating costs. These will increase the cost per house by about 3,000, but is more than covered by an increase in the selling price of at least 5,000. Showhouses The first showhouse is now having the roof tiles completed which will be done by the end of May. The house is about 6 weeks away from final finish including electrics, plumbing, insulation and plastering. The second showhouse is coming along behind. The value of building the showhouses before starting main construction goes beyond having finished properties to show buyers. It is also the first time that the two dimensional plans drawn by our architect can be seen in three dimensional real life. We have decided to change some window sizes in the production run, and also the change the position of some of the internal, non-structural walls. This is the fine tuning that ensures the best possible usable design is delivered for buyers. New house construction The plan is from now on to start roughly one new house a week, and to sell one house a week. It will not be quite as neat as this, as construction is related to sales and that tends not to happen quite so smoothly, but overall it s a good measure. We ve looked at the original forecast, and although we started onsite later than anticipated resulting in winter arriving before much was completed, we expect to catch up with the original plan and be in the same position as we originally anticipated by the end of this year. Congratulations to the team in Romania for the excellent progress already made, and continuing, with a target to be back on the original track by the end of this year. Timescale for completions It takes typically 3 months to build a house and another 1-2 months to complete all legal work. So the cycle of construction through to completion is 4-5 months. Houses started in May will complete the sales cycle in September. We therefore expect completions to start in the third quarter of this year, but at a relatively modest level. Good numbers of completions are expected in the fourth quarter. Phase 1 Construction Investors Showhouse build progress Investors in Phase 1 are expecting their investment to be returned with the agreed profit by the end of 2015, and we Phase Two
expect to meet that timescale. Phase 2 Investment The release of Phase 2 of the development is based on local demand. The site is being extended from 56 to 138 houses, together with common space for children s playgrounds, commercial units and so on. It s an excellent opportunity for investors to generate returns of 40% over three years (growth), or average 12% net pa (income). Most elements of risk have either been eliminated or are very well controlled, now that so much work has been completed on Phase one. Modern Romania a trendy bar and wine tasting Future visits We will be making more visits to Panorama Gardens later in the year. If any investors are interested in joining us they are more than welcome. Please let Alli Holmberg (alli@avantiswealth.com) know and she will advise you of when we have firmed up on dates. Overall As you should expect in a development of this size on a greenfield site, there will always be issues to solve and decisions that need to change about design and construction. Some costs will go up as in our improved specification. Other costs go down as in savings on gas installation. The house prices will increase a little to cover material cost increases. The local demand is extremely strong. Our partners are now talking both to Bosch and Ikea about buying a number of properties for their visiting management. Whilst this might account for 15 sales by itself, we have not taken these into consideration in our forward sales plan. Video available shortly Old Romania Radish sellers by the roadside Dramatic scenery the mountains above Cluj We are cutting together a video of the visit which features feedback from the group that visited. It was overwhelmingly positive both about Romania and about Panorama Gardens. Some of the group are already planning a return visit with their partners just to show them around. One of investor is already involved in Phase 1 and has committed to Phase 2 as a result of the trip. The group was there to understand more about Romania as well as the development at Panorama Gardens. Here s a few photos to give you a feel of the country and city life in Cluj. Income Investment Phase High Two Traditional Romanian food and some of our group
Contact us To discuss this investment opportunity in further detail and to obtain the full investment guide, please contact. F.R.E.S.H. Investment Russell Bonner Investment Broker 01273 447 299 russell@avantiswealth.com The F.R.E.S.H. investment strategy has been developed exclusively by Avantis Wealth Ltd as a model for investment selection that provides transparency and confidence for investors. Investments that we consider meet the requirements of F.R.E.S.H. carry the F.R.E.S.H. certification: Rod Thomas FCA Managing Director 01273 447 229 rod@avantiswealth.com F R E S H Free phone: Avantis Wealth Ltd is not authorised or regulated by the Financial Conduct Authority (FCA). Telephone: Avantis Wealth Ltd does not provide any financial or investment advice. We strongly recommend that you seek appropriate professional advice before entering into any contract. The value of any investments can go down as well as up and you might not get back what you put in. You may have difficulty selling any investment at a reasonable price and in some circumstances it might be difficult to sell at any price. 01273 447 299 Please call us during UK office hours www.avantiswealth.com Fixed income Regular high income Exit strategy defined Security in place Hands-off (no management involvement) Do not invest unless you have carefully thought about whether you can afford it and whether it is right for you and if necessary consult with a professional adviser in accordance with the Financial Services and Markets Act 2000. These products are not regulated by the FCA or covered by the Financial Services Compensation Scheme and you will not have access to the financial ombudsman service. Information is provided as a guide only, is subject to change without prior notice and does not form part of any contract. Every effort has been made to ensure this information is accurate. 2014 Avantis Wealth Ltd. All rights reserved worldwide