A fine example of how to fix a tender is reported on in today’s Hospodarske noviny. It goes back to the now disgraced Social Democratic power broker David Rath, the governor of the Central Bohemian region, who became involved in the reconstruction of an old castle not far from the Prague airport.
It had already come out that some bright sparks realized that a tender for the work had come up with a price that failed to, shall we say, realize its full potential. So the tender was scrapped and a new one was held.
Lo and behold, the new project came out tens of millions of crowns more expensive (but who cares, since the EU was going to foot a lot of the bill, right). Turns out, writes HN, that the winning company, Konstruktiva Branko, actually prepared the documentation for all the bids of all the shortlisted companies. As in, they all agreed to take a back seat in order to provide cover for the winner. Very professionally done, all in all. A real textbook example that criminals everywhere can learn from. Except that someone in the whole complicated web of relationships had been talking to the police about it for months.
The real wonder of it all is that no one in the police team investigating the plot tipped off any of the actors, making it possible for Rath to be nabbed, red-handed, with CZK 7m in cash, in his car (he was also carrying a gun).
The Czech Industrial Research Forum is reporting that the total stock of modern warehouse space rose 75,600 sqm in Q1 2012 to 3.9 million sqm. It adds that another 132,500 sqm is under construction, suggesting that the market isn’t quite as dead as people have been making out. Over the same period, gross take-up was 130,700 sqm, a 30% drop from Q4 2011. Net take-up, the number developers really worry about fell 43% to just 89,000 sqm. Vacancy rose for the first time in two years to 7.3% from 6.7% in Q4 2011.
Milan Janku of the failed developer ECM has said he wants to sell 8 projects and complete five others. Those are worthy goals for most developers, but a bit difficult to pull off for companies that declare themselves insolvent.
It’s also a bit eyebrow-raising that the company’s share price jumped 20 percent yesterday. Raised the eyebrows of Prague’s stock exchange enough for it to halt trading the company’s securities for a bit. Somebody knows something we don’t (for now).
Anyone still planning to buy agricultural land in order to build on it will really wish they’d gotten around to it back in 2010, as the price for getting an exemption from the agricultural fund just went up. That’s the word from the legal firm Wilson & Partners.
The Amendment was published in the Collection of Acts (Sbírka zákonů) on 28 December 2010 andbecame effective as of 1 January 2011. It will have substantial impact on all the upcomingprojects as in most cases the Payment shall be increased several fold.
Here’s the original. It might just be worth reading, seeing as some land could jump 9x in price.
There’s really nothing like organizing a good stampede to kick things off at a new mall. If the consumers in Chomutov are feeling the economic pain of recession, you wouldn’t know it from the way they charged into the new mall. By the looks of things, the escalators may have been an attraction in themselves. The local paper’s website carries the video.
Spectrum stores is opening a 10,000 sqm shopping center tomorow (Sept. 30) in Chomutov, 9,000 sqm of which has been leased. A Tesco supermarket sits on the ground floor, with other tenants including CCC shoes, Dr. Max, Orsay, Takko, Euronics and Apollo Sport.
Cushman & Wakefield, which has been in charge of finding clients, points out it’s one of just four centers which will open this year in the Czech Republic. Continue reading
Sekyra has sold the Nestle building in Modrany, Prague 4, to the investor CPI for CZK 650m. Nestle’s been in the 15,000 sqm building Sekrya built since 2006. Founder Ludek Sekyra calls the transaction proof that the investment market is waking up. Some might say vendors are waking up as well.
Retailer Halfords will spend £2.5m closing down seven stores in Poland and the Czech Republic according to the Indendent. That’s bad news for seven retail park owners. (Here’s a map of the Czech stores, until it’s taken down)
The retreat will benefit the cycle and car parts retailer’s profit and loss account by about £2m in the next financial year. More importantly, it will also enable Halfords to focus on its core UK shops and the recent £73.2m acquisition of Nationwide Autocentres. While the car servicing company made only a four-week contribution to Halfords’ figures, the robust performance of both businesses enabled it to predict full-year pre-tax profits of between £114m and £116m, ahead of City forecasts.
We’re accused fairly often of being too pessimistic in our view of this crisis, so how about a bit of cautious optimism? In Slovakia and its former country mate Czechia, we’re hearing ever-so-careful hints that things may have turned the corner. Sales of flats, say Slovak developers have picked up considerably since September. To be fair, what these developers have in common are projects that are nearing completion, and there’s nothing a cautious consumer likes more than a project that looks likely to finish safely.
But in the Czech Republic, interest in mortgage has been edging higher for four months now. To be precise, the volume of mortgages (not the actual number of loans handed out). In October, the average new mortgage was worth CZK 1.62 million. This rose to CZK 1.66 million in November. The biggest interest, according to Hyposervis, is for loans fixed for 5 years (43% of loans). The average interest rate locked in is 5.55%. A one year fix goes for 5.85%.
Who’s going to pay attention to Vaclav Klaus once the Lisbon Treaty gets signed? That may the question sitting at the core of the Czech president’s dithering over whether to sign the document that’s intended to increase the efficiency of an expanded European Union. Perhaps the reformer-turned-populist professor is worried that only the ultra-greens will bother with him when he trots out his trademark anti-environmental yammerings. Otherwise, he’s unlikely to get a listen from a world that’s moved on in virtually every aspect of life. His only hope is that like bell bottom jeans and mini skirts, his brand of politics could come back into fashion some day.
His alleged reason for not wanting to sign the treaty goes back to the tired argument about Sudeten Germans trying to get back property they or their ancestors owned before the Czechs threw them out after WWII. Didn’t the whole evil Sudeten schtick go out of style way back in, like, the late 1990’s? The Germans have a good word for this sort of cheap argument: peinlich. In Czech, it’s trapný.
CIJ Blog asked Philip Wood of Cushman & Wakefield’s Capital Markets Group about the investment market. If you agree or disagree, the comments box is the place to say so…
The investment market has been extremely slow in 2009. Do you see any causes for optimism yet?
The negative press surrounding the CEE region has abated recently, and there have been transactions closing in the last few months across the region on prime offices, secondary offices, shopping centres, and redevelopment opportunities. Whilst these transactions might not necessarily represent green shoots of recovery, it is evidence that the market is still functioning if pricing expectations are realistic. Those buyers have been both domestic and internationally based.
In terms of causes for optimism, I think that a number of things need to happen before confidence starts to improve. Firstly, those few remaining building owners who have not recognised price corrections need to accept that the market has changed. Secondly, in light of price corrections, lenders across CEE need to continue to constructively assess the status and quality of the assets that they lend on, identify where the problems might be, and try and adopt pragmatic approaches to asset management of those buildings if at all possible rather than start foreclosures on loans. And thirdly, the available debt needs to become more accessible and affordable to new investors in the region – there is already equity out there waiting to be allocated into real estate in the CEE region. None of these occurances are insurmountable, and it’s clear that they beginning to happen, which is a good thing for the market.
Will Czech assets struggle until they fall to assumed levels in the UK?
The traditional buyers for prime real estate in Czech Republic are also looking to other markets in Europe and beyond, and the UK is being used as a benchmark as a market that has re-priced quickly, realistically, and significantly. But there is also still a currency play with the strength of the EUR on the pound, so there is a double benefit in price shift for EUR denominated funds. Continue reading