5 min.
Editorial Invest in Slovakia
What is involved in the preparation of a development project and what separates the average from the exceptional? Today we will show this with a concrete example from practice. We will look at a project Bytový dom Sokolská, s ktorým členovia INVEST CLUBU zhodnocujú svoje prostriedky už od 1.1.2021.
Funding for the project began with the "Renovate to Condo" campaign - introduced as our last campaign of 2020. The project has undergone several changes since then. For example, the original plan included 2 commercial spaces and 5 apartments, now it is 1 and 7 in favor of apartments.
A key part of a good project is location - the one thing you can't change in the future. It significantly affects the desirability and price of the property. Zvolen is one of the desirable cities, with prices competing with the next regional city - Banská Bystrica. It is connected to the rest of Slovakia by several modes of transport, from motorways to the nearby airport, and provides its residents with complete civic amenities - shopping centres, kindergartens, primary, secondary and higher schools, sports facilities and more.
Places for leisure and other activities are also important points of interest that make life more pleasant for residents. All of this has a direct impact on the marketability of the project. Sokolská Street, where the project is located, is close to the city centre. There is plenty of greenery on the street and in its surroundings and the frontage of the house is oriented to the south-west, which ensures plenty of sunlight. Further greenery is planned directly in the building.
Another important factor is affordability. The prices of 2 to 3 room flats in Zvolen, in the period of the beginning of the project, ranged between 2100 - 2400 EUR/m2 (in the centre 2500, up to 2800). Which is a price level that has been maintained since then, even slightly increased.
The project started pre-sales in 1Q 2022, 2 apartments were sold in 3 months. We will talk more about this in the Marketing section.
As for the price, it should be mentioned that not only the purchase price plays a role, but also the subsequent energy costs. These are significantly reduced by the initial investment of the Project Owner in the heat pump and photovoltaic panels. The Project Owner has also ensured sufficient parking spaces on site. This is covered parking in an enclosed building, which will increase both the convenience and security of the residents' property.
There is a lot of planning work on the project before construction begins.
A construction project can be delayed for a number of reasons, whether due to inclement weather, permitting delays, and other factors that even the project owner cannot predict in advance.
Time complications caused by the global pandemic have pushed back the completion schedule for Sokolka from 4Q/2022 to 1Q/2023. The war conflict in Ukraine has caused an increase in the price of materials and labor. Here, the Sokolka Project Owner cleverly protected itself by contracting the price in advance.
Predicting war and pandemic is almost impossible. However, with careful planning and conservative estimates, you can prevent many future problems. This includes a realistic, if not slightly pessimistic, estimate of the sale price, timeline, and a sound evaluation of the SWOT analysis.
A job well done leads to a quality result. Therefore, when choosing a construction company, do not just look at the price, but look for a reliable partner.
The request for funding comes after the construction study has been completed. The investor deserves to know what he is getting into.
For smaller projects, bank financing is difficult to impossible, even if it is a quality project with numbers that make sense.
In such a situation, the project owner has the option to finance the project from its own resources or from the resources of large - institutional investors or smaller investors through crowdfunding. Often it is a combination of all three or more options.
The Sokolka project has so far used two - the Owner's resources and crowdfunding through our online platform. Invest Club members have been able to invest in this project in a total of 5 campaigns. A total of 538 investor members have participated. They have funded an amount of 654 371,37 EUR, from which they will achieve an average annual return of 11,69 %. The end of the investment period is scheduled for 1Q 2023. The owner of the total will pay EUR 123 867,64 in revenue.
Projekt nekončí dokončením výstavby, ale jeho úspešným predajom. Tu má vlastník projektu možnosť zamerať sa primárne na predaj, prenájom, či kombináciu oboch. K tomuto sa priamo viaže marketing projektu, teda jeho prezentovanie potenciálnym kupcom, či nájomcom.
Most of the interested parties learned about the Sokolka project through FB pageswhich has been visited by 34,116 people since its inception and another on the website sokolka.sk. Our investors themselves were also interested in buying flats in Sokolka, to whom the Owner of the project offered a discount of 3 %. He decided to sell directly, without a real estate agency, thus being able to provide quality service to buyers and at the same time reduce the price by its commission.
The main advantages of Sokolka include the intimacy of living in a gated community and apartments ranging in size from 32 to 77m2 in a quiet part of Zvolen, still close to the centre.
We hope you found the information in this article interesting. In the next case study we will discuss project selection from the investor's point of view.
