REVALUATION INTERNAL PURPOSES LAND NEAR ROGOZNICA

Transcription

TRIGON CAPITAL
LAND KNOWN AS LUKA VILLAGE
ROGOZNICA
CROATIA
The Board Of Directors
Trigon Capital LLP
Parnu Road
Tallinn
10141
Estonia
REVALUATION
FOR
INTERNAL PURPOSES
ON
LAND NEAR ROGOZNICA (KNOWN AS LUKA RESORT)
LUKA VILLAGE
ŠIBENIK COUNTY
CROATIA
AS AT
31 DECEMBER 2008
King Sturge d.o.o.
Eurotower
Ivana Lučića 2a
Zagreb 10000
Croatia
T +385 1 4826 114
F +385 1 4826 194
TRIGON CAPITAL
ROGOZNICA
CROATIA
CONTENTS
REF
SECTION
PAGE
INSTRUCTIONS
EXECUTIVE SUMMARY
1
LOCATION
1
2
DESCRIPTION AND CONSTRUCTION
2
3
DATA ROOM
3
4
PROPOSED SCHEME
3
5
ACCOMMODATION
5
6
SERVICES
5
7
REPAIR AND CONDITION
5
8
TOWN PLANNING
5
9
SITE AND GROUND CONDITIONS
7
10
ENVIRONMENTAL CONSIDERATIONS
7
11
TENURE
7
12
TENANCIES
11
13
MARKET COMMENTARY
11
14
DEVELOPMENT APPRAISALS
16
15
PURCHASERS COSTS
18
16
VALUATION
18
17
MARKET VALUE
21
18
DEVELOPMENT ISSUES
21
19
SWOT ANALYSIS
22
TRIGON CAPITAL
APPENDICES
1
LOCATION PLAN
2
STREET PLAN
3
SITE PLAN
4
PHOTOGRAPHS
5
VALUATION & VALUATION ASSUMPTIONS
6
TERMS AND CONDITIONS
ROGOZNICA
CROATIA
TRIGON CAPITAL
ROGOZNICA
CROATIA
The Board Of Directors
Trigon Capital LLP
Parnu Road
Tallinn
10141
Estonia
For the attention of Mr Timo Aarmaa, Associate Director
Dear Sirs
LAND REVALUATION
LAND NEAR ROGOZNICA (KNOWN AS LUKA RESORT), LUKA VILLAGE, ŠIBENIK
COUNTY, CROATIA
INSTRUCTIONS
In accordance with your instructions confirmed within your email of 17 November 2008 and King
Sturge Offer of Service letter dated 29 February 2008 we have revalued the above land on the
following basis:
•
Market Value
We wish to draw your attention to Chapter 17 of our report which refers to current market
conditions and potential instability.
The below report provides a valuation of the land based upon its development potential. The
report provides our opinion of the value and details the valuation considerations used to support
our advice. As per the terms of our instruction, we have focussed solely on the valuation, based
upon a number of assumptions made. As such, this report does not provide a full investigation
into the land, these investigations possibly affecting the reported value in this report. In the
event that full reliance is placed upon the reported value we would stress the need for a full
investigation.
King Sturge d.o.o. originally carried out a valuation report of the subject property dated March
2008, a revaluation report dated 30 June 2008 and a subsequent revaluation report 30
September 2008. Trigon Capital requires quarterly revaluations for internal purposes and this
report is a revaluation and relies upon the information provided previously.
TRIGON CAPITAL
ROGOZNICA
CROATIA
SPECIAL ASSUMPTIONS
In preparing this report we may have made a number of Special Assumptions regarding the
property. These are not matters of fact and we understand accord with the proposed
development to be undertaken on the site. These assumptions directly affect our valuation, and
are therefore “Special Assumptions” under the terms of the Standards.
•
We have carried out our valuation based upon both a residual valuation approach to a
possible future development scenario (as provided by Trigon Capital) and a comparable
land value basis based on the land’s current zoning situation.
In accordance with the facts and assumptions set out in this Valuation Report, we are of the
opinion that the Market Value of the freehold interest is €8,900,000 (Eight Million Nine
Hundred Thousand Euros) as at 31 December 2008.
This Valuation Report and the valuations and opinions contained herein have been prepared in
accordance with the Practice Statements and Guidance Notes set out in the Valuation
Standards of the Royal Institution of Chartered Surveyors (6th edition effective 1 January 2008).
King Sturge d.o.o. originally carried out a valuation report of the subject property dated March
2008. This valuation was undertaken by Charles B Maunsell BSc MRICS, former King Sturge
d.o.o. Zagreb who inspected the land on 03 March 2008. The site has also been inspected by
Katarina Greguric, King Sturge d.o.o. Split.
The revaluation has been undertaken by Paul S Davinson MRICS, King Sturge d.o.o., Zagreb
and overseen by Jens M Madsen, Managing Director, King Sturge d.o.o. Zagreb. We confirm
that this surveyor has relevant experience in this type of property and this particular location.
Valuers qualified for the purpose of the valuation have valued the property. In addition we have
consulted Commercial Agents within King Sturge, Split, Croatia office. We have acted as an
External Valuer as defined in the RICS Appraisal and Valuation Standards.
CONFIDENTIALITY
This Valuation Report is provided for the use only of the party to whom it is addressed and no
responsibility is accepted to any third party for the whole or any part of its content. The basis of
valuation may not be appropriate for other purposes and should not be so used without prior
consultation with us.
Neither the whole nor any part of this Valuation Report nor any reference thereto may be
included in any published document, circular or statement, nor published in any way without our
written approval of the form and context in which it may appear.
TRIGON CAPITAL
ROGOZNICA
CROATIA
Yours faithfully
JENS MOLLER MADSEN
Partner
King Sturge d.o.o.
T
+385 1 4826 114
F
+385 1 4826 194
E
[email protected]
This valuation has been prepared by
This valuation has been approved by
PAUL S DAVINSON, MRICS
31 DECEMBER 2008
JENS MOLLER MADSEN, PARTNER
31 DECEMBER 2008
TRIGON CAPITAL
ROGOZNICA
CROATIA
EXECUTIVE SUMMARY
Location
Land near Rogoznica, Luka Village, Šibenik County, Croatia. The
subject property is located near Rogoznica, approximately 52 km
east from the centre of Split, south of the main highway E65 heading
in a north-easterly direction toward Šibenik, 36km away..
Description
The site is currently open undulating agricultural shrubland. The
western edge of the site is 70 metres from the coastline. The total
site area is 277,771 sqm (27,8 ha).
Tenure
For the purposes of this valuation we have assumed that the site is
owned Freehold in its entirety by the current owners and that there
are no ownership disputes on the site. The cadastral excerpt shows
that Rondel d.o.o. are the registered owners. We understand that
Rondel d.o.o. is a company created solely for this project and that
Rondel d.o.o. is wholly owned by Trigon Capital.
Tenancies
We are not aware of any tenancies in place on the current site.
Proposed
Development
Summary
The site is currently used and has permission for agricultural use.
Market Value
€8,900,000 (Eight Million and Nine Hundred Thousand Euros)
Valuation Date
31 December 2008
Dependent upon future zoning changes, the intention is for the land
to be developed into a tourist and residential development (known as
Luka Resort). An initial scheme has been drawn up for this
development as part of the architect/design competition. In summary
this scheme consists of 133 premium villas, 13 luxury villas and a
150 room hotel (boutique spa) with ancillary sports, retail and
catering facilities. The total gross developable area will be 59,332
sqm. The residential units will total 45,332 sqm gross buildable area
and the commercial parts total 14,000 sqm gross buildable area.
TRIGON CAPITAL
Occupational
and
Investor Demand
ROGOZNICA
CROATIA
We anticipate moderate to good demand from occupiers and
investors who would be keen to occupy and invest in future buildings
(and the overall site) as proposed at this location. The site has
potentially adequate public transport and road connections. The
improvements to the highway network and access points, both
vehicular, public transport and pedestrian will be key factors. There
are currently three existing access points to the site from the main
road. There is growing demand for well located properties and
development sites in the Rogoznica and Dalmatian region and this
site would present an opportunity to gain a foothold or increased
presence primarily in the leisure, tourism and residential market
accordingly.
The residential tourist and second home market in Croatia is affected
by both current zoning restrictions/purchasing options and the
European financial climate. The affects of this is that current
demand levels are stable and we do not expect future growth levels
to match historic patterns over the last five years. Conversely,
Croatia’s imminent accession towards European Union status may
benefit future developments within the medium term.
The current envisaged zoning will be T1/T2. This does not allow for
individual plots to be sold, discouraging traditional residential
development (in favour of managed hotel and residential schemes).
This may adversely affect investor confidence in the final
development. Residential Zoning would be preferable.
Current recessionary pressure within the Global market should not
adversely affect the long term development scheme value due to the
proposed development timescale. Assuming the current economic
turbulence is part of an economic cycle we envisage that the final
developed scheme will not be developed within the current
recessionary period.
However, at the date of valuation, 31 December 2008, investors are
finding leverage increasingly difficult to obtain, the cost of leverage
has risen, the willingness to fund property development has
decreased and perception of risk in property investment has
increased. All these factors will have a negative impact on the land
value at valuation date.
TRIGON CAPITAL
Issues Requiring
Further Investigation
ROGOZNICA
CROATIA
We have not been provided with detailed documentation and have
not investigated the following matters.
• Title
•
Tenancies
•
Environmental Situation
•
Contamination
•
Planning Situation
•
Technical Reports for proposed development
Clarification of these matters will be required for the full Valuation
Report and may have a bearing on the reported value. The main
issue that influences the value of the subject land is its zoning
status and potential to be rezoned to allow some form of
development as proposed.
Key Issues
The success of future development on this site is in part dependent
on the establishment of the Rogoznica/Luka region as a main
destination for tourism, leisure and residential facilities, together with
the existing marina at Rogoznica. It is probable that this district
could become a key destination off the main coastal route E65
between the main cities of Split and Šibenik - as well being in close
proximity to Split International Airport - and becomes a self supported
destination for residents, businesses and visitors to the city.
The zoning status is the key issue for development potential.
This summary should be read in conjunction with the remainder of our Valuation Report
and must not be relied upon in isolation
TRIGON CAPITAL
1.
ROGOZNICA
CROATIA
LOCATION
Macro Location
Rogoznica is a village and harbour (with a marina) on the mid-Dalmatian coast of the Republic of
Croatia, that lies in the southernmost part of the Šibenik-Knin County, and is located approximately 52
km east from the centre of Split, south of the main highway E65 heading in a north-easterly direction
toward Šibenik, 36km away.
Šibenik-Knin County has a recorded population of 112,891 persons and the population of Rogoznica
village is 2,391 (source: Crostat Republika Hrvatska census 2001) with nearby Luka village being
comprised of approximately 20 residences. .
There are a number of main international roads serving Rogoznica/Luka from Central and Eastern
Europe. These are the A1/E70/A3 which connects Ljubljana, Slovenia approximately 507m north-east
of Rogoznica/Luka, the E65/A1 domestic route to the Croatian capital Zagreb which is 386 km north of
Rogoznica/Luka, the E65/A1/A6/A7 which connects Trieste, Italy 463 km north-east of Rogoznica/Luka,
the E65/A1/A9/A2 connecting Graz, Austria 553 km north of Rogoznica/Luka, the E65/A1/A9/A2
connecting Vienna, Austria 738 km north of Rogoznica/Luka. Within Croatia are the main cities of
Zagreb which is 386 km north of Rogoznica/Luka, Rijeka approximately 394 km north east of
Rogoznica/Luka, Split 52 km east of Rogoznica/Luka and Dubrovnik 256 km south-west of
Rogoznica/Luka.
The development of motorways linking Zagreb, Rijeka and Split to Dubrovnik is under way and this
motorway network currently terminates/originates at Split. The Croatian government hopes to complete
the motorway by 2009. The construction of the highway between Pula and Rijeka (as well as the
highway between Pula and the Slovenian border) was finished in 2006. The construction of the highway
between Zagreb and the Slovenian border was finished in 2004. The highways between Zagreb and
Rijeka and between Zagreb and the Hungarian border are finished. The construction of the highway
from Zagreb/Rijeka to Split was finished in 2005.
Rogoznica’s Frapa Marina (seven km from the subject site) has approximately 300 wet berths and 150
dry berths.
The main railway station of Šibenik is located 36km north (by main road) of the subject land, which has
daily services to Split main railway station and the Sibenik „spur“ joins the main Split-Zagreb railway
line at the inland junction of Sitno Donje, midway between Šibenik and Split, and via the capital Zagreb
has international railway connections to principal European cities including Trieste, Venice, Ljubljana
Munich, Vienna, Budapest, Paris, Geneva, Graz and Moscow and connecting services beyond.
There are regular bus services to Split & Šibenik from Rogoznica, with connecting coach services from
Split & Šibenik to Zagreb and other major towns in Croatia, as well as services from Split to BosniaHercegovina, Italy, Slovenia & Serbia.
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ROGOZNICA
CROATIA
Split International Airport is located 35 km east of the subject land, accessed by main road. The airport
has a number of domestic and regional schedules to a number of main European cities and principal
hub airports of Munich, Frankfurt, Amsterdam, London, Zurich and Paris.
The road networks around Rogoznica provide easy access to most parts of the region, as well as the
coast. Public parking is limited within Rogoznica, largely being on-street pay parking or car parking in
the region's hotels.
The main industries in Rogoznica/Luka are farming, fishing, tourism (especially nautical tourism) with
nearby Split being the business, administrative and cultural centre of Dalmatia, with Split having a
major shipbuilding industry, as well as plastic masses processing/manufacturing, cement industries and
food processing.
We attach a general location map in Appendix 1 of the report.
Micro Location
The land is located on Croatia’s Dalmatian coast approximately midway between the main coastal
conurbations of Split, Croatia’s second largest city (52 km away) and Šibenik (36 km away). Split
International Airport lies 35 km away to the east.
The subject land is located near to Luka village and is across the bay from Rogoznica, a touristic
peninsular village which also has a marina, with the western edge of the subject land being 70 metres
from the coastline.
The main road from Split city centre to Split Airport & Trogir (en-route to subject land) is currently being
upgraded to dual carriageway status by early 2010, thereby improving access to subject land.
This site and the subject land are currently zoned as purely agricultural land. On the shoreline, due
west of the subject land, approximately four “unauthorised” dwelling houses are being demolished, as
these were built without planning permission/licence. On the shoreline immediately adjacent to the
south-western point of the subject land there are around six existing (recently constructed) dwellings,
with more extensive residential development further east along the shoreline (immediately south &
southwest of the subject land), which in turn approaches the even more extensive residential
development of Luka village, which faces the subject land across the Luka inlet. Presently there is no
existing residential development on the higher elevations of the headland (of which the subject land
forms a part), only as aforementioned the coastal development at sea level.
We attach a location plan in Appendix 2.
2.
DESCRIPTION AND CONSTRUCTION
The Site
The total site area extends to 277,771 sqm (27.8 ha) which consists of various parcels of land, we
understand presently all under ownership of Trigon Capital. Most of the “assembled” parcels of land
are contiguous, except for a parcel in the extreme north part of the subject land, with the ownership of
the land in-between separately owned. The south-western point of the subject land is where the
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ROGOZNICA
CROATIA
seashore is 100 metres away to the west, with the in-between land to the north and west of this point
being a possible acquisition and thereby affording actual access to the seashore.
The site is undulating and irregular in shape, sloping upwards from (and occasionally at right angles to)
the seashore, with the closest edge being 100 metres from the seashore, which is south & southwest of
the subject land. The arid and well drained terrain is covered by limited scrub/small trees up to two
metres in height, broken up by dry stone walls, with no real present agricultural use except for very
limited olive trees and has not supported any previous development. There are no buildings on the site.
The land height varies approximately between 30 & 150 metres above sea level and all of the subject
land (especially the central elevated section) offers good views of the coastline, Rogoznica peninsula &
Marina/harbour, Luka village, as well as the Kornati islands in the near distance.
At about 400 metres from the north-eastern corner along the unmade gravel access road, a section of
land adjacent to this access road has been levelled off with gravel (by the present owner) on 2 levels, in
anticipation of future development – this is approximately 30 metres across by 30 metres in depth, with
each of the 2 levelled strips being 15 metres deep and parallel to the access road.
Currently, access and egress to the site from the main road is via three access roads of varying quality,
mostly unmade uneven 2.5 metre wide gravel roads between dry stone walls, as well as some unmade
gravel “public roads” of better quality and up to four metres wide. Distance to the subject land from the
made, tarmacadamed highway is approximately one km for each of the three unmade access roads.
At the time of our inspection we gained access onto the site from one of three existing access roads as
above. Our observations were also made from the main road close to the site as well as from across
the bay in Rogoznica.
3.
DATA ROOM
Trigon Capital have provided King Sturge d.o.o. Zagreb with the following documents. We have relied
upon the identifiable information contained within the following documents to assist us in carrying out
the valuations according to the proposed scheme. We have used information provided to King Sturge
as part of our previous valuation instructions as part of this report.
Project Overview “Land in Luka Village” prepared by Trigon Capital 18th February 2008
Cost estimation study for infrastructure – Luka & Rogoznica – unknown source 23rd December 2007
Luka Resort Development Concept dated July 2008 produced by Trigon Capital
4.
PROPOSED SCHEME
An initial scheme has been drawn up for this development as part of the architect/design competition.
In summary this scheme consists of 133 premium villas, 13 luxury villas and a 150 room hotel (boutique
spa) with ancillary sports, retail and catering facilities. The total gross developable area will be 59,332
sqm. The residential units will total 45,332 sqm gross buildable area and the commercial parts total
14,000 sqm gross buildable area.
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CROATIA
We have set out below a summary of the development proposed for the subject site and we can
elaborate as follows.
The aim of Luka Resort is to provide a high quality resort consisting of exclusive villas and a five star
boutique spa hotel with ancillary recreational and catering facilities. The building types can be split into
residential premium and luxury villas and commercial hotel and ancillary uses.
The objective is that the resort complies with the likely development parameters of the land assuming it
is rezoned for T2 zone (see Town Planning section 8). In accordance with this it is intended that of the
277,771 sqm site area, 60% (166,663 sqm) will be for residential use, 20% (55,554 sqm) for hotel use
with the remainder for roads, access and green areas. Trigon Capitals proposed floor areas are as
follows.
Description
GBA per Unit
Number of Units
Premium Villas
Luxury Villas
Hotel
Gross Buildable Area
(GBA)
39,999 sqm
5,333 sqm
9,000 sqm
300 sqm
400 sqm
-
Shops
Sports/leisure
Playground
1,000 sqm
1,000 sqm
3,000 sqm
-
133
13
150 rooms (total 300
beds spaces)
-
The intended facilities and features are as follows.
•
High quality architecture with balcony/terrace areas. The premium villas will be on a
plot size minimum of 1,000 sqm and the luxury villas on a minimum plot size of 2,500
sqm.
•
Residential units two above ground storeys and commercial maximum three above
ground storeys.
•
Swimming pools (private pool for each villa).
•
Reception office
•
Spa and beauty centre
•
Restaurants, bars and lounges
•
Activities centre
•
Conference capabilities
•
Outdoor theatre
•
Pedestrian areas
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5.
ROGOZNICA
CROATIA
•
Children’s playgrounds
•
Additional services including babysitting, housekeeping, car rental etc.
ACCOMMODATION
The subject site currently comprises 277.771 sqm (27,8 ha) of open land and the current proposed
development when completed will provide 59,332 sqm gross buildable area.
6.
SERVICES
Given the undeveloped nature of the property, it is unlikely that there are connections to all mains services
including electricity, gas, water and mains drainage. We have assumed for this valuation that given the
location of other units close by in Luka village, the services required for the adequate running of the
development can be provided to the property the cost of which will be borne by the municipality (in part
from developers fees).
7.
REPAIR AND CONDITION
Within our valuation we have assumed any building works will be completed to a high standard as
proposed by the borrower and that all appropriate Building Regulation Certificates and Guarantees can
be provided. This is consistent with the exacting demands of the likely purchaser profile for this
property.
8.
TOWN PLANNING
We have not been provided with documents and/or information relating to the site and the town
planning situation.
We understand that the site does not fall within any conservation areas, and that there are not any
listed buildings on site.
The subject property falls under the jurisdiction of Rogoznica Municipality (Opčina Rogoznica
Masterplan. The land is currently zoned for agricultural use. A site plan of the subject land is attached
below at Appendix 1. The parcels of land coloured green and yellow collectively are our understanding
of the location of the subject land. Based on this, the subject land is not subject to reclassification in
the current plan. Based on this, the land will continue in its form with no imminent development
potential.
We have not made direct inquiries with the Rogoznica Municipality regarding the Planning situation.
Our understanding of the Planning situation is as follows. The proposed spatial plan (GUP) of the
Municipality of Rogoznica is still in the first preparatory phase. The process for adoption of the final
version of the spatial plan will go through approximately 5 phases (in which it is currently at Phase 1).
We do not expect the final version of the spatial plan in the present year of 2008.
For development zones, following the adoption of the spatial plan, detailed masterplan can be sought
(UPU) which will enable future development in detail. It is likely that development zoning for coastal
sites (including all or part of the subject land) will be given T1 or/and T2 designations. These are tourist
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CROATIA
classifications which in summary will enable the development of tourist based development including
hotel, leisure, ancillary retail and office, villas and marinas. Currently the T1 and T2 designations do
not allow for individual plots to be sold, effectively discouraging traditional residential
development (in favour of managed hotel and residential schemes). We are however aware that
through share agreements, residential developments have been carried out successfully along
the Croatian coastline.
It is likely, particularly for coastline sites in Croatia, that development will be in accordance with T1
or/and T2 designations.
It is Trigon Capitals intention that the land is eventually rezoned from its current agricultural designation.
The intention is that the land will be rezoned to T2 designation. T2 designation typically has the
following development parameters.
•
30% of developable area to be hotels use
•
70& of developable area to be residential units
•
Maximum Gross Buildable Area 80% of land area
•
Maximum building footprint 30% of land areas
•
Minimum Green area 40%
The Croatia authorities are keen that coastal developments are complementary to the location and of a
benefit to the economy, hence the restriction on touristic designations yet the encouragement for
gradual growth within the tourist industry and the local economies generally.
We are aware that the Municipality of Rogoznica is restricting the amount of development zones and
we understand that the size of some zones are being reduced.
The cost of creating sufficient access and service provision for commercial and residential development
are substantial. The need to carry out and operate development in accordance with environmental and
pollution stipulations are paramount.
The success of future development on the subject land and neighbouring land is dependent upon
creating a well designed, high quality scheme. The relative low density of future development will
necessitate the need for highest quality development in line with the intentions for key coastal sites and
the customer profile. The spa hotel, ancillary retail/sports facilities and residential elements in particular
will create a complementary setting for a number of functions, as demanded by the tourist industry.
The intended profile of visitors to the Luka/Rogoznica region is high and developments must cater for
this including satisfying the attraction of the region as a yachting destination and attracting sea borne
visitors. Marinas (such as the one in nearby Rogoznica) are seen as key to this and a complement to
tourist developments.
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9.
ROGOZNICA
CROATIA
SITE AND GROUND CONDITIONS
Based on the information above we have assumed that the site is capable of supporting the scheme
proposed.
10.
ENVIRONMENTAL CONSIDERATIONS
We have not undertaken or commissioned an environmental assessment to establish whether
contamination exists or may exist in respect of the subject property and its environs. We have not
undertaken any detailed investigations into past and present uses of the subject property or of any
adjoining property.
During the course of our inspection of the property and its immediate vicinity for valuation purposes and
our usual subsequent enquiries, the possibility that the subject property may be contaminated has been
considered by complying with the various requirements of the Royal Institution of Chartered Surveyors.
In particular, we have had regard to the contents of the Appraisal and Valuation Standards (5th Edition)
and separate Guidance Note: Contamination and its Implications for Chartered Surveyors.
During our inspection of the property we did not observe evidence of potential and actual contamination
on the property that we consider could be likely to affect our valuation.
11.
TENURE
The cadastral excerpt shows that Rondel d.o.o. are the registered owners. We understand that Rondel
d.o.o. is a company created solely for this project and that Rondel d.o.o. is wholly owned by Trigon
Capital.
Our understanding of the site boundaries is delineated by the green shaded areas within the red line in
the Site Plan as provided by Trigon Capital attached in Appendix 3.
We have not seen a copy of a report on title and have assumed that the site is held freehold and is free
from any restrictive or onerous covenants that would restrict the proposed development. Given the above,
we would stress the need for a Legal Due Diligence report to be carried out.
For the purposes of the valuation and in line with the above required legal report we have not seen any
other encumbrances or unduly onerous or unusual easements, restrictions, outgoings or conditions that are
likely to have an adverse effect on the value of the property and we have thus assumed that there is a
good marketable title.
Below is the Cadastre extract from Rondel d.o.o. Za Poslovno Savejetovanje, Split, Obala Narodnog
Preporoda 10. This confirms the site area to be 277.771 sqm (27.8 ha).
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CROATIA
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CROATIA
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12.
ROGOZNICA
CROATIA
TENANCIES
For the purpose of valuation we have assumed that the site is currently vacant and that there are no
tenancies present.
13.
MARKET COMMENTARY
.
Residential Property Market in Croatia
As in other transitional countries the change in the political system effected an economic recession and a
collapse in the housing market. Under the new political set up, the sale of public housing (25% of housing
stock) was affected which had a significant impact on the housing market, making Croatia a nation of
homeowners.
Housing and economic problems in Croatia were principally caused by the war during the early to mid
1990’s. Many houses were destroyed and residents displaced which created urgent housing provision
organized through non-transparent and centralized government interventions. Housing subsidies for
victims of the war, the war veterans and members of their families, under centralized, bureaucratic and
corrupted housing provision (the quality of those housing units is a serious issue) was a gesture
reminiscent of the communist regime.
Since 1990 the government has introduced several financial packages for certain social sectors such as
those employed in the army, police, and certain ministries.
During the 1990’s, loans from commercial banks for housing purposes were unaffordable for most of the
population, due to high interest rates and short repayment periods. However at the turn of the century the
commercial banks provided better packages, with lower interest rates of approximately 7.5%, longer
repayment periods and an 80% loan to value ratio. The improvement in financial provision has led to an
increase in first time buyers. In June 2004 an annual increase of 17.1% was recorded for bank loans to
households and with interest rates forecast to decrease in line with European Union prerogatives, this trend
is set to continue. This trend has made bank credits the preferred method of financing.
In Croatia, more than 86 % of households own or have their own house or an apartment, with under 10%
of those being burdened by mortgage loans. This places Croatia at the top of the list of European
countries when it comes to owning property with Hungary ranking first with 92.2%. In Lithuania, ranked
third, 84 % households own a house or an apartment, and in Slovenia ranked fourth, this percentage is 82
%. Czech Republic is ranked lower with 46 %, followed by Germany with 42 %. Selling of state owned
apartments was followed by a significant change in residential status in Croatia.
On the Adriatic coast, prices have grown significantly over the last ten years, triggered in part by
investment purchases by non Croatians and international developers. However there are some constraints
and limitations around the construction of large apartment blocks and summer resorts which have kept a
cap on the rate of market growth. Property law within Croatia is also not entirely liberalised and this has
delayed the entrance of some potential international purchasers.
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In addition, the current European economic climate has reduced significantly the volume of non Domestic
residential purchasers within Croatia. This has led the a decrease in sales prices in certain areas, a larger
volume of unsold units and a reduced amount of development activity and even developments put on hold.
Residential Property Market in Rogoznica/Luka village
Purchase/sale prices for villas and apartments in Rogoznica/Luka vary according to size, location
(especially in regard to availability of sea views), age, standard of construction and amenities. Prices for
villas (200 to 250 sqm) currently are in the region of €2,500 to €3,000 per sqm and apartments achieve
anything from €1,700 to €2,200 per sqm.
Demand
Over the last few years, economic growth and the availability of more flexible loans have triggered
domestic demand for new apartments. Previously, Croatian families tended to live in family houses,
with up to three generations of the family living together. However, young Croatian people today can
afford to buy new apartments and young couples are leaving “family houses” to set up their own
independent residence. This new economic and cultural situation is increasing domestic demand for
new apartments and, as a consequence, new investors are becoming interested in Croatia and
particularly Dalmatias residential sector.
Property purchase demand by non Croatians is concentrated on the Croatian coast, preferably along
the Istrian peninsula and in Dalmatia.
House price inflation began a couple of years ago when banks begun to offer different products for
financing apartment purchases. The annual price growth up until 2007 has been around 5%. With the
current level of construction starts, the purchase restrictions of tourist zones and the current European
economic climate, prices may stabilise and decrease over the short term. However, prices of older
apartments outside the centre are expected to fall rapidly as supply increases, as current residents
seek better quality accommodation.
Tourist Market In Croatia
Travel and tourism is Croatia's leading export sector, generating the highest share of foreign exchange
income and creating a large number of jobs. Owing to its long tradition, tourism in Croatia accounts for
a larger part of GDP than in most other transition countries. Travel and tourism in Croatia in 2007
accounted for approximately 20% of Croatia’s GDP and provided 250,000 jobs. The development
policy of the Croatian Government relies on a continually strong travel and tourism sector and the
government is accelerating the privatisation of hotels, adopting a policy of encouraged investment into
the tourist sector.
According to forecasts by World Travel and Tourism Council (WTTC), Croatia’s travel and tourism was
expected to grow 7.8 % in 2007 and achieve annualised real growth of 7.9 % per annum, in real terms,
between 2007 and 2016, which will place its growth forecast in fifth position globally and third within
Central and Eastern Europe. The current economic climate may lead to a short term slowdown in
tourism as individuals are forced to budget more prudently with foreign holidays being considered a
luxury good. However the timeframes for the subject development should bypass the current
recessionary period with demand reverting to historical growth levels envisaged in the medium term.
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WTTC
League
Table
Extract
Travel
(10 – Year Real Growth, Annualised, %) - 2007 – 2016
and
Tourism
World Ranking Country
Growth Rate (%)
1
Montenegro
10.2
2
China
8.7
3
India
8
4
Romania
7.9
5
Croatia
7.9
6
Vietnam
7.5
7
Latvia
7.3
8
Maldives
7.2
9
Albania
7.0
10
Cambodia
7.0
Total
Demand
Despite the country's huge potential for tourism development, the number and type of attractions and
activities are still limited in comparison to other Mediterranean countries. Considerable opportunities
exist in the development of several sectors to meet the rapidly growing demand. The long term tourism
strategy of Croatia is to become an elite European tourist destination. In order to do so, Croatia will
require modern facilities that meet international demand. Whilst Government policy should help
stimulate investment, it should also help Croatia avoid the risk of over-developing resorts in specific
regions of the country.
The most significant advantages that the Croatian tourist industry can use in the promotion of the tourist
industry are the following:
•
Unique, preserved nature and environment, with a largely undeveloped coastline.
•
Cultural and historical heritage,
•
Mild Mediterranean climate,
•
Proximity to European markets,
•
Long-established tradition of tourism.
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In line with current trends in international tourism demand, the Croatian tourism industry should be
further developed through various forms of selective tourism, which are currently only tentatively
available at present. Particular emphasis will be placed upon the development of golf courses,
improvements in nautical infrastructure with modern multi-facility marinas, along with further
diversification in tourist facilities. In particular the country needs to improve the accommodation
facilities, which at present do not meet the improving profile and volume of tourists in the country
The structure of the accommodation market is different from more mature markets such as Spain,
which has higher proportion of tourists in hotels (62.9%). This indicates that there exists significant
potential for a shift in the Croatian market, which is likely to evolve with the change in tourist profile.
Hotel Market
Hotels in Europe had a remarkable year in 2006 with almost double levels of growth achieved from
2005. The combination of robust economic performance, high profile international events, the growing
popularity of newly emerging tourism destinations, coupled with people's increasing desire to travel and
experience new locations have all been key in driving performance forwards. The outlook for the hotel
market in 2007 looked good despite predicted lower rates of growth (official figures not yet published).
This is very much in line with global economic and tourism indicators, which both show performance
stabling slightly during 2007 and 2008.
Performance of global hotel markets – 2006 versus 2005
Location
Occupancy
Average Room Rate Revenue Per Available
Room (RevPAR)
2006
Change
2006
change
2006
Change
%
%
US$
%
US$
%
68.7
-1.0
142
17.8
97
16.5
South 64.7
0.6
122
12.3
79
13.0
Europe
69.9
3.1
146
8.7
102
12.1
Asia
71.3
0.1
122
10.9
87
11.0
Middle East
Central
America
&
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Global Performance (Data in Euros) Period ending April 2008
April 2008 vs April 2007
Europe
Eastern Europe
Northern Europe
Southern Europe
Western Europe
Occ %
2008 2007
69.4
66.6
63.3
65.6
71.4
66.4
65.2
67.4
71.0
66.6
ADR
2008
2007
110.32 107.12
122.81 107.36
104.75 106.59
112.26 109.53
114.18 106.22
RevPAR
2008
2007
76.58
71.38
77.77
70.75
74.80
70.78
73.21
73.78
81.08
70.75
Percent Change from
April 2007
Occ.
ADR RevPAR
4.2
3.0
7.3
-3.9
14.4
9.9
7.5
-1.7
5.7
-3.2
2.5
-0.8
6.6
7.5
14.6
Source: STR 2008
Within Croatia, the hotel sector is developing rapidly, with the majority of publicly owned stock being
privatised over the last five years. In terms of international operators, Le Meridien and Hilton brands
have now entered the market, which is likely to generate the entrance of further international operators.
The market is likely to undergo considerable expansion over the next five years, especially in the 4 star
market, in response to increasing travel and tourism demand. The existing stock will be re-developed
to meet the requirements of an improving guest profile. In particular there will be improvements in fit
out standards, with an increasing aesthetic appeal. Room sizes are also likely to increase from an
average of approximately 22 sqm to in excess of 35 sqm for basic industry standard. There will also be
an improvement in ancillary services such as food & beverage, and leisure provision as hoteliers seek
to maximise guest revenues. Much of these changes will complement other areas of the Croatian
tourist industry, most notably the marine and charter yacht markets.
Land Market
The land market has experienced the same appreciation as the market for end product, and in recent
years land price inflation has in fact exceeded that of apartment and villas, as developers have
increased their confidence on the market.
Throughout Croatia, site values are, proportionately well below more mature markets where land prices
typically comprise between 30-35% of sale values. Land in Dubrovnik, the most mature sub-market in
Croatia, on average accounts for 22.5% of average sale prices which is in line with more established
markets. However, on average, land in coastal areas comprises approximately 10% of property prices.
King Sturge anticipates that this margin will decrease as the market matures.
Land prices are higher when planning benefits are in place such as UPU, Location Permit, DPU or
Building Permit. This is a result in of the reduction in planning risk at this stage, which is reflected in the
fact that domestic banks will provide finance once a site has the benefit of one of the aforementioned
planning status’.
As a result of the delays in producing the physical plans for many parts of the coast, sites are rarely
traded with planning benefits. Planning gain on site values is therefore largely speculative.
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Since 1990, the construction industry has not been able to match demand. It is estimated that between
1960 and 1990, 60% of the current stock was built, with only 10% built since 1990. The reasons for the
lack of supply are mainly coastal zoning overhauls, the bureaucratic difficulties in obtaining building
permits, unclear ownership records and disparate land structures.
In terms of the mid to long term future of supply, this will be characterised by the emergence of large
resorts as a result of the zoning resolutions and improved 'purchasing' regulations, that have allowed
the assembly of large sites. However this process has been hindered by the fact that the county plans
have been undergoing adjustments since 2003, which has effectively put a halt to construction during
this period. In the near future the resort development process will be further hindered by the fragmented
nature of zones which are mostly under multi ownership, requiring resort developers to assemble sites
from several different owners. At present average site sizes are 1,700 sqm in Croatia, which is 56% of
average site sizes in Spain (3,010 sq m), demonstrating the issues that developers will encounter when
looking to construct large resorts.
King Sturge research anticipates that there will be a significant increase in average site sizes over the
next five years as sites are transferred from multi to uniform ownership. This will result in a more
cohesive property market with less disparate spatial patterns, encouraging fluidity. However, it is still
too early to see any specific trend in respect of these developments.
Considering the lack of supply of new developments, there remains scope for further construction on
the coast. In this context however, it should be emphasized that one of Croatia’s strengths on both the
holiday home and the tourism market, is its preserved nature which differentiates it from comparable
markets such as Spain and France. It is estimated that only 15% of the mainland coastal area is
developed, which compares with the Mediterranean average of 70%. Whilst this margin will narrow, it is
understood that the Croatian government is keen to ensure that no more than 30% of the coastline is
developed.
Below are some examples of agricultural land prices that King Sturge are aware of.
14.
Location
Price (asking prices)
Comments
Hvar-Mandrač
€19 sqm
Agricultural Land
Hvar Basina
€12 - €25 sqm depending on coastal
proximity
Agricultural Land
Brač - Rt Zastup
€25 sqm
Agricultural Land
Brač–Supetar
€28 sqm
Agricultural Land
DEVELOPMENT APPRAISALS
To arrive at the value of the property assuming full site redevelopment we have used comparable land
values as described above and a further Residual method of valuation. The Residual method involves
calculating the residual value by first estimating the Gross Development Value of the property and then
deducting all estimated development costs required to carry out the project. The residual method is
highly sensitive and in this instance is used as a guide to ascertain the land value and not to produce a
future investment value of the completed development. We have provided further scenarios in the
Sensitivity Analysis later in the report.
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The valuation of development sites is a complex matter, involving a number of variables that must be
studied individually for each property. Typically many of the limitations on development only become
clear once specialists have carried out detailed investigations.
In particular, the following points can all have a significant impact on value and the cost implications
have to be determined by specialists:
•
•
•
•
•
Contamination – if contamination exists the costs of cleaning up the site can be considerable,
Special foundations – the requirement, if any, for special foundations can only be confirmed
after soil surveys have been carried out and engineers reports obtained,
Demolition costs – while valuers can make approximate estimates of demolition costs, the
actual costs can vary considerably according to the use of the existing buildings, the access to
the site, etc,
Permitted uses and future floor areas – despite the guidance given in master plans, it is
essential to discuss a future project in detail with the local planning authority, often negotiating
over a series of meetings, before being able to confirm that a particular use and future floor
area can be adopted,
Other factors – in addition to the above, some sites involve special considerations such as,
additional taxes, fees, etc, which can rarely be estimated accurately without obtaining specialist
advice.
It is not the role of the valuer to attempt to accurately quantify the cost implications of the above factors
in a first valuation exercise.
We recommend that you instruct development specialists to coordinate the various studies that will be
needed to answer all these questions.
In view of the above, we have estimated the value of this site without having made any deductions for
the cost of:
·
·
·
De-contamination of the site
Special foundations
Any other extraordinary costs that may be associated with this scheme
The residual method requires the input of relatively large amounts of data, which are rarely absolute or
precise. A small difference in each figure can lead cumulatively to a much larger difference in the
residual land value. This applies especially to the sale price per sqm, build costs and finance costs.
We would therefore stress that:
The residual value given by the residual approach should be treated as an approximate indication of
value rather than a definitive figure, and
The residual value will change in time with changes in the property and financial markets. Quite minor
changes in those markets can lead to much larger changes in end values. Whilst the Croatian Kuna
has remained stable to the Euro, the large fluctuations in the British sterling demonstrates the potential
impact that currency fluctuations may have on pricing and demand levels.
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In our development appraisal, we have proceeded as follows:
We have valued the property assuming the construction of the scheme mentioned in this report based
on comparable sale prices in the area. We have valued the property using a discounted cash flow
model using “Circle Developer” software. All payments and receipts are assumed to be in advance.
15.
PURCHASER’S COSTS
We understand that Rondel d.o.o. is specifically created as the holding company of the subject
property. As a company purchase the land purchaser and therefore Real Estate Transfer Tax is not
payable. Therefore our valuation makes no allowance for such deduction within our acquisition costs.
In the event the company is not traded as an SPV, Croatian Real Estate Transfer Tax (RETT) of 5%
would be applicable.
Agency and Legal Fees have been deducted at 2% and 0.5% respectively.
16.
VALUATION
Development Description
We have assumed that the development will be built in 2 phases with a total development period of 126
months (ten years and six months) beginning in December 2008 and ending in May 2019.
Phase One consists of the hotel development and 50% of the residential (74 units) parts. The
planning/pre construction period is 60 months (five years) followed by six months post development and
a 24 month (two year) residential sales commencing on June 2016 to May 2018.
Phase Two consists of the remaining 50% of the residential (73 units) parts. The planning/pre
construction period is 72 months (six years) from date of valuation followed by six months post
development and a 24 month (two year) residential sales commencing June 2017 to May 2019.
We have used the following areas within our appraisal. We have adopted a gross/net ratio of 90% for
the above ground residential floors. We have assumed that 5% of the residential units will be
balcony/terrace area and we have adopted a price ratio of 50% of the internal sales price.
Net Development Value
For the premium villas we have assumed a current sale price of €3,000 sqm net of PDV for all the Units.
For the luxury villas we have assumed a current sale price of €3,250 sqm net of PDV for all the Units.
As expected in a development of this scale, the intention will be to increase unit sale prices as the
scheme develops. The sales price is assumed to grow at a rate of 2.5% per annum throughout the
length of the project. Growth starts at the beginning of the project.
This produces a Gross
Development Value for the residential parts of €168,711,486.
For the hotel parts we have applied a value of €225,000 per room.
Development Value for the residential parts of €33,750,000.
This produces a Gross
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We have deducted commercial purchaser’s costs (future development disposal) of 2% and 0.5% each
for Agency and Legal Fees respectively for the commercial parts.
Phase 1 Net Development Value €117,924,193
Phase 2 Net Development Value €84,038,524
Total Net Development Value €201,962,717
Development Costs
We have deducted our estimates of the following items from our Gross Development Value to arrive at
a residual land value.
Communal and Water Fees – We have calculated a communal fee and water fee charge of €4,768,400
(based on €10 cubic metre above ground buildable area) reflecting a greenfield site with no deductions
for existing structures. We have assumed that these fees have not been paid and are not reflected in
the reported land value. We have assumed that this fee will be incurred in the first phase of the
development in its entirety. The communal fee does not include the electricity connection fee and water
supply connection charges which have been added in out appraisal at a cost of €1,216,249 as indicated
by the provided cost information.
Demolition costs - We have not included any costs for demolition on this site.
Infrastructure - We have assumed that the Communal Fee includes the cost of external works including
utilities connections, sewage, water, gas, landscaping, etc. We have allowed for €1,000,000
landscaping and on site access roads.
Contamination Costs - We have not incorporated any budget to allow for any decontamination costs
which may be required.
Construction costs – We have assumed a construction cost €1,400 sqm for the proposed residential
property based on the gross external area of the ground and upper levels. For the hotel and ancillary
areas we have applied a construction cost of €1,750 sqm. We have assumed an “S-Curve” distribution
of construction costs to reflect the typical pattern of expenditure. We have inflated the construction
costs at 2.5% per annum for the first five years (up to phase one construction).
We have also made a contingency allowance for project cost over-run at 3% of construction costs.
Professional fees – We have assumed a total of 10% for professional fees for architects, quantity
surveyors, engineers, project management, etc.
Marketing/Sale Fees – We have assumed a total cost of €1,500,000 relating to marketing of the project
and total agent’s and legal fees based on the 2% and 0.5% of the sale of the completed development.
Project Contingency – We have assumed a contingency on the entire project at 1% of hard costs,
technical services and marketing.
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Financing - Interest charges during the construction period assuming development finance at 7.5% over
a development period of ten years and six months. Our finance assumes a 60% debt ratio with 40%
equity funding.
Developer’s Profit
As this project is entirely speculative we have assumed a fixed developer’s profit at 20% on total costs
in each phase which reflects a reasonable return for a developer. This produces a total development
profit of €35,029,267.
Residual Land Value
Based upon the above development scenarios our residual land value is as follows:
€8,995,506.
Our full development appraisal is attached in Appendix 5.
Comparable Value Considerations
Actual transactions for agricultural land are not so transparent and this is where the „hope value“
element becomes relevant in this valuation.
In addition to the information contained in our market Commentary, we have set out below some sales
prices of land in the region that we are aware of.
Location
Size
Price
Comment
Hvar, Zagradaca
460,000 sqm
€10-€15 sqm site area
Agricultural land. Adjacent the coastline
Žut island
330,000 sqm
€15 sqm site area
Agricultural land. Sea views
Vis island
1,000,000 sqm
€10 sqm site area
Title issues. Well located. Sea views
Hvar,
near
Zavala
Brač island
5,300 sqm
€11 sqm site area
Asking price
617,000 sqm
€10-€15 sqm site area
Sea view. Access Road
Primosten
90,000 sqm
€120 sqm site area
Asking price, zoned for T1 use, sea view
&
Infrastructure in place.
Based upon the residual appraisal and the available land price information we have applied a land
value of €32 sqm site area. We have considered the following in this valuation.
The residual appraisal shows a conservative development appraisal for the proposed development.
However the added value of this and imminent development timescale is only realised once the zoning
situation enables this development.
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Generally mainland land prices are higher than those on the islands. We have therefore adjusted
upwards from available information on asking prices for island sites in Croatia.
17.
MARKET VALUE
Subject to the facts and assumptions of this report and based on current values, we are of the opinion
that the Market Value of the subject property is €8,900,000 (Eight Million Nine Hundred Thousand
Euros) which equates to €32.00 sqm site area based upon 277,771 sqm (27,8 ha) site area.
The opinions and values stated in this report represent our objective professional view as at the date of
valuation. However, since mid-September, there has been a series of major events in the financial
sector, stemming from turmoil in the capital markets, which are detrimentally affecting confidence and
are creating a degree of illiquidity in property capital markets. Conversely, the recent 0.5% and 0.75%
drops in Euro Base Rate on 6 November and 4 December to a level of 2.5%, coupled to various
national Governments’ plans to stimulate their economies may restore some confidence.
Collectively, these events are likely to create some instability in market values going forward but are so
recent that we are not able to assess accurately the effect there may be on the market with the
evidence available to us at the present time. We have, therefore, applied our professional judgement
as far as it is possible to do so and recommend that, going forward, movements in values are kept
under review. In a relatively short period of time these effects should be more readily discernable and
we would be pleased to review the values again at a later date to either confirm or amend our opinion
as necessary.
18.
DEVELOPMENT ISSUES
The below factors will have an effect on the value of the future development, cost levels and the current
land price.
Sensitivity Analysis
By its nature, speculative development carries inherent risks and we have attempted to adopt a realistic
scenario based upon our findings and the information provided.
In the above Development Appraisal, the scheme produces a positive residual land value thereby
making the scheme viable based upon these adopted variables.
We have also applied a Developer’s Profit reflecting the likely feasibility parameters of a third party
developer which again is a variable which has a great influence on the Residual Land Value.
Other major variables include the amount of built area such as multi storey parts, the inclusion of non
retail operators that would compliment the retail scheme such as leisure operators and void periods
upon letting and future vacancy levels.
Also attached at Appendix 5 is a sensitivity analysis showing the effects on the residual appraisal of
input changes.
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Project Development Costs
We have not been provided with detailed costs in relation to this development. We have adopted a
residential build rate of €1,400 sqm for the residential space and €1,750 sqm for the hotel/commercial
areas and adjusted for inflation as described. We consider this to be a realistic cost for such a scheme
and we have regard to local knowledge of costs, the Building Cost Information Service who provide
average build costs and consulted with our King Sturge Building Consultancy team, both of which
support the build cost stated.
Whilst fluctuations in the relationship between the Euro and Kuna will either have a positive or negative
effect on the site value in Euros they will additionally have an inverse effect on construction costs and
fees. Thus whilst the recent movement of the Euro against the Kuna will have had the effect of
marginally increasing the value of the subject site the development costs will have inversely increased.
In the current economic climate with the perception of risk attached to development and the increased
cost of finance we would consider any further increase in site value to have been offset and thus
consider the value to remain at the same level as the September 2008 valuation.
Timescale
We have allowed for a ten year total development timescale to reflect the potential time need to change
the zoning, design the scheme, receive the necessary permits and cost/tender/manage the project. In
the event zoning changes occur sooner, this will open up the option for earlier development than
appraised within this report.
Development Risk
There is risk in undertaking the comprehensive development of the site. As in any development, there
are risks associated with the progression of the building works and in terms of the contractors achieving
the intended specifications, dimensions, areas and so on, together with their ability to not only complete
the development to a good standard but also within the scheduled timescale.
There are also
outstanding risks of identifying previously unknown site problems or technical issues. Employment of a
project monitor experienced in this type of mixed use scheme will help to mitigate this risk on the bank’s
part.
19.
SWOT ANALYSIS
Strengths
•
The site occupies a sizeable & visually amenable area of land adjacent to Luka village
which allows for development of a custom built residential/spa hotel/ancillary retail
facility on a previously undeveloped site, with good touristic demand with the proximity
of Rogoznica and its marina
•
The scheme provides for an attractive low density development in keeping with the
natural scenery and topography of the local area excellent sea view from all parts of
the site.
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•
As Luka village continues to expand this area will become a more highly populated
residential area. There is already a measure of local residential development
underway to the south of the site, which will give the development a strong local
customer base.
•
Highlights of a future project are the site proximity to the coastline, gradual gradients,
current lack of comparable high quality developments and a finite amount of
developable land.
•
A historical lack of high grade hotel accommodation in the Croatian market.
Weaknesses
•
The site currently does not have optimum access or egress off the main road
and the present unmade internal access roads will need to be upgraded . It is important
that this is rectified in order for the development to work effectively.
•
The site may not have the necessary services required to support the proposed
scheme at the moment.
•
There are a number of „unauthorised“ residential developments in construction
close to the subject site, the undecided status of which may affect favourable
planning/zoning of the subject site.
•
If rezoned, the likely designation will be touristic use. The legislation to this currently
prohibits individual residential development disposal. Different purchase options or
funding restrictions may exclude segments of potential customers. Such a situation
may adversely affect investor confidence and may result in values below that of a
traditional residential development. Public perception of ‘Time Shares’ and historic
Spanish development of this nature is negative. This situation must be considered
carefully by Trogon Capital in the formation of the development holding company,
development scheme service charges and future marketing initiatives as this may
adversely affect investor confidence in the final development.
Opportunities
•
The value appreciation of the land is dependent upon its development potential. Whilst
there is a market for agricultural land, the attraction to an investor lies in hope and
expectant development potential.
•
The site is well located and would host a number of future development options
with an residential/spa hotel/ancillary retail based scheme satisfying demand and
achieving highest values with options for complimentary operators alongside.
•
The local property market in Rogoznica/Luka remains reasonably buoyant and well
located and designed schemes should attract high demand from international
investors. We expect this to continue as good centres establish themselves and
demand grows, regionally and nationally over the medium to longer term.
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Threats
•
Future supply of newer residential holiday homes across the bay in Rogoznica.
•
Generally within Croatia there are numerous pipeline schemes comparable to the
proposed subject scheme. Fruition of these schemes will increase supply levels and
competition accordingly.
•
The current economic climate is uncertain and inward investment leves are reduced
both at the investment stage and end user stages.
•
The current economic climate and the associated impact on the ability to achieve
finance, increased cost of financing and perception of risk associated with residential
development and investment.
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Yours faithfully
JENS MOLLER MADSEN
Partner
King Sturge d.o.o.
T
+385 1 4826 114
F
+385 1 4826 194
E
[email protected]
This valuation has been prepared by
This valuation
authorised by
PAUL S DAVINSON MRICS
SENIOR ASSOCIATE
King Sturge d.o.o.
Eurotower
Ivana Lučiča 2a
HR 10000
Zagreb
Croatia
JENS MOLLER MADSEN
PARTNER
King Sturge d.o.o.
Eurotower
Ivana Lučiča 2a
HR 10000
Zagreb
Croatia
T +385 1 4826 114
F +385 1 4826 194
has
been
checked
T +385 1 4826 114
F +385 1 4826 194
25
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TRIGON CAPITAL
ROGOZNICA
CROATIA
APPENDIX 1
LOCATION PLAN
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ROGOZNICA
CROATIA
27
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ROGOZNICA
CROATIA
APPENDIX 2
STREET PLAN
28
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ROGOZNICA
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29
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ROGOZNICA
CROATIA
APPENDIX 3
SITE PLAN
30
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ROGOZNICA
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31
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APPENDIX 4
PHOTOGRAPHS
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SUBJECT LAND, LUKA VILLAGE IN DISTANCE
33
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ROGOZNICA
CROATIA
SUBJECT LAND, ROGOZNICA SETTLEMENT IN DISTANCE
34
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ROGOZNICA
CROATIA
VIEW OF SITE FROM ROGOZNICA PENINSULA
35
TRIGON CAPITAL
ROGOZNICA
CROATIA
VIEW TOWARDS ROGOZNICA
36
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ROGOZNICA
CROATIA
37
TRIGON CAPITAL
ROGOZNICA
CROATIA
38
TRIGON CAPITAL
ROGOZNICA
CROATIA
SECTION OF SITE LEVELLED OFF IN ANTICIPATION OF DEVELOPMENT
39
TRIGON CAPITAL
ROGOZNICA
CROATIA
VIEW TOWARDS LUKA VILLAGE
40
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ROGOZNICA
CROATIA
INTERNAL ACCESS ROAD
41
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APPENDIX 5
RESIDUAL VALUATIONS ASSUMPTIONS
42
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CROATIA
TIMESCALE & ASSUMPTIONS
KING STURGE D.O.O.
Trigon Capital
Luka Resort
Timescale (Duration in months)
Project commences Dec 2008
Part 1: Hotel (150 rooms) and ancillary commercial and residential (74 units)
Stage Name
Duration
Phase Start
Start Date
End Date
Anchored To
Aligned Offset
Dec 2008
Pre-Construction
60
Dec 2008
Nov 2013
Purchase
End
0
Construction
24
Dec 2013
Nov 2015
Pre-Construction End
0
6
Dec 2015
May 2016
Construction
End
0
24
Jun 2016
May 2018
Income Flow
End
0
End Date
Anchored To
Aligned Offset
Post Development
Sale
Phase End
Part Length
May 2018
114
Part 2: Residential (73 units)
Stage Name
Duration
Phase Start
Start Date
Dec 2008
Pre-Construction
72
Dec 2008
Nov 2014
Purchase
End
0
Construction
24
Dec 2014
Nov 2016
Pre-Construction End
0
43
TRIGON CAPITAL
Post Development
Sale
ROGOZNICA
CROATIA
6
Dec 2016
May 2017
Construction
End
0
24
Jun 2017
May 2019
Income Flow
End
0
Phase End
May 2019
Part Length
126
Project Length
126
(Merged Parts - Includes Exit Period)
Finance Rates
Loan Set 1
Rate
Debt Finance Ratio 60%
7.50%
Months
Start Date
Perpetuity
Dec 2008
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CROATIA
APPRAISAL SUMMARY
KING STURGE D.O.O.
Trigon Capital
Luka Resort
Appraisal Summary for Merged Parts 1 2
REVENUE
Sales Valuation
m²
Rate m²
Gross Sales
Adjustment
Net Sales
18,090.00
€3,000.00
54,270,000
12,612,101
66,882,101
‡ Luxury Villas
2,520.00
€3,250.00
8,190,000
1,903,319
10,093,319
‡ Premium Villa Terraces
3,618.00
€1,500.00
5,427,000
1,261,210
6,688,210
504.00
€1,625.00
819,000
190,332
1,009,332
17,820.00
€3,000.00
53,460,000
14,070,957
67,530,957
3,564.00
€1,500.00
5,346,000
1,407,096
6,753,096
‡ Luxury Villas
2,160.00
€3,250.00
7,020,000
1,847,701
8,867,701
432.00
€1,625.00
702,000
184,770
886,770
135,234,000
33,477,486
168,711,486
‡ Premium Villas
‡ Luxury Villa Terraces
‡ Premium Villas
Totals
48,708.00
168,711,486
Investment Valuation
Hotel and ancillary commercial
Manual Value
33,750,000
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CROATIA
GROSS DEVELOPMENT VALUE
202,461,486
Purchaser's Costs
1.50%
(498,768)
NET DEVELOPMENT VALUE
201,962,717
NET REALISATION
201,962,717
OUTLAY
ACQUISITION COSTS
Residual Land Value
8,995,506
Agent Fee
1.00%
104,016
Legal Fee
0.50%
52,008
Town Planning
250,000
Survey
250,000
9,651,529
CONSTRUCTION COSTS
Construction
m²
Rate m²
Cost
‡ Hotel and ancillary commercial
14,000.00
€1,750.00
27,719,501
‡ Premium Villas
20,100.00
€1,400.00
31,837,827
‡ Luxury Villas
2,800.00
€1,400.00
4,435,120
4,020.00
€1,400.00
6,367,565
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560.00
€1,400.00
887,024
19,800.00
€1,400.00
31,362,636
3,960.00
€600.00
2,688,226
‡ Luxury Villas
2,400.00
€1,400.00
3,801,532
480.00
€600.00
325,846
‡ Premium Villas
Totals
68,120.00
109,425,277
Contingency
3.00%
2,137,411
Contingency
3.00%
1,145,347
Developers Contingency
1.00%
712,470
Developers Contingency
1.00%
381,782
Road/Site Works
1,930,000
Road/Site Works
1,000,000
109,425,277
7,307,011
Municipal Costs
Water Supply
541,666
Electricity/transformers
674,583
Municipal Costs
2,903,600
Municipal Costs
1,864,800
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CROATIA
5,984,649
PROFESSIONAL FEES
Architect
10.00%
11,270,804
11,270,804
MARKETING & LETTING
Marketing
1,000,000
1,000,000
DISPOSAL FEES
Sales Agent Fee
2.00%
3,555,152
Sales Legal Fee
1.00%
1,777,576
5,332,728
FINANCE
Interest paid to Debt Sources:
Debt (7.50%)
Total Interest paid to debt financing
Total Interest Paid
TOTAL COSTS
16,961,452
16,961,452
16,961,452
166,933,450
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CROATIA
PROFIT
Equity
Residual Percentage (100.00%)
35,029,267
35,029,267
35,029,267
Performance Measures
Profit on Cost%
20.98%
Profit on GDV%
17.30%
Profit on NDV%
17.34%
Equity IRR% (without Interest)
13.77%
‡ Inflation/Growth applied
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Growth on Sales
Ungrown
Growth
Total
Premium Villas
Growth Set 1 at 2.50%
54,270,000
12,612,101
66,882,101
Luxury Villas
8,190,000
1,903,319
10,093,319
Premium Villa Terraces Growth Set 1 at 2.50%
5,427,000
1,261,210
6,688,210
Luxury Villa Terraces
819,000
190,332
1,009,332
Premium Villas
53,460,000
14,070,957
67,530,957
Premium Villa Terraces Growth Set 1 at 2.50%
5,346,000
1,407,096
6,753,096
Luxury Villas
7,020,000
1,847,701
8,867,701
702,000
184,770
886,770
Uninflated
Inflation
Total
Inflation on Construction Costs
Premium Villas
Cost inflation at 2.50% var.
28,140,000
3,697,827
31,837,827
Luxury Villas
3,920,000
515,120
4,435,120
5,628,000
739,565
6,367,565
784,000
103,024
887,024
27,720,000
3,642,636
31,362,636
Premium Villa TerracesCost inflation at 2.50% var.
2,376,000
312,226
2,688,226
Luxury Villas
3,360,000
441,532
3,801,532
288,000
37,846
325,846
24,500,000
3,219,501
27,719,501
Premium Villa TerracesCost inflation at 2.50% var.
Luxury Villa TerracesCost inflation at 2.50% var.
Premium Villas
Luxury Villa TerracesCost inflation at 2.50% var.
Hotel and ancillary commercialCost inflation at 2.50% var.
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RENT & SALES SCHEDULE
Trigon Capital
Luka Resort
SALES
Areas (Sq Metres)
Units
Area/Unit
Total Net
Sales
Gross Sales
%
Fixed
Total
Growth
Growth
Net Sales
m²
Area m²
€ pm²
€ pa
Ded'n
Ded'n
Ded'n
Rate %
Amount €
€ pa
Hotel (150 rooms) and ancillary commercial and residential (74 units)
Premium Villas
Luxury Villas
Premium Villa Terraces
67
270.00
18,090.00
3,000.00
54,270,000
0.00
0
0
2.50%
12,612,101
66,882,101
7
360.00
2,520.00
3,250.00
8,190,000
0.00
0
0
2.50%
1,903,319
10,093,319
67
54.00
3,618.00
1,500.00
5,427,000
0.00
0
0
2.50%
1,261,210
6,688,210
7
72.00
504.00
1,625.00
819,000
0.00
0
0
2.50%
190,332
1,009,332
0
0
15,966,961
84,672,961
Totals
24,732.00
68,706,000
Residential (73 units)
Premium Villas
66
270.00
17,820.00
3,000.00
53,460,000
0.00
0
0
2.50%
14,070,957
67,530,957
66
54.00
3,564.00
1,500.00
5,346,000
0.00
0
0
2.50%
1,407,096
6,753,096
Luxury Villas
6
360.00
2,160.00
3,250.00
7,020,000
0.00
0
0
2.50%
1,847,701
8,867,701
6
72.00
432.00
1,625.00
702,000
0.00
0
0
2.50%
184,770
886,770
0
0
17,510,524
84,038,524
Totals
23,976.00
66,528,000
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CONSTRUCTION
Areas (Sq Metres)
Units
Area/Unit Total Gross
m²
Area m²
Cost
Unit Cost
Gross Cost
Inflation
Inflation
Total Cost
€ pm²
€
€
Rate %
Amount €
€
24,500,000
24,500,000
2.50% var.
3,219,501
27,719,501
Hotel and ancillary comme
1
14,000.00
14,000.00
1,750.00
Premium Villas
Luxury Villas
67
300.00
20,100.00
1,400.00
420,000
28,140,000
2.50% var.
3,697,827
31,837,827
7
400.00
2,800.00
1,400.00
560,000
3,920,000
2.50% var.
515,120
4,435,120
67
60.00
4,020.00
1,400.00
84,000
5,628,000
2.50% var.
739,565
6,367,565
7
80.00
560.00
1,400.00
112,000
784,000
2.50% var.
103,024
887,024
5,055,537
43,527,537
Totals
27,480.00
38,472,000
Residential (73 units)
Premium Villas
66
300.00
19,800.00
1,400.00
420,000
27,720,000
2.50% var.
3,642,636
31,362,636
66
60.00
3,960.00
600.00
36,000
2,376,000
2.50% var.
312,226
2,688,226
Luxury Villas
6
400.00
2,400.00
1,400.00
560,000
3,360,000
2.50% var.
441,532
3,801,532
6
80.00
480.00
600.00
48,000
288,000
2.50% var.
37,846
325,846
4,434,239
38,178,239
Totals
26,640.00
33,744,000
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CROATIA
APPENDIX 6
TERMS AND CONDITIONS
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BASIS OF VALUATION & VALUATION ASSUMPTIONS
1.0
BASIS OF VALUATION
1.1
Market Value means the estimated amount for which a property should exchange on the date of valuation
between a willing buyer and a willing seller in an arms length transaction after proper marketing wherein the
parties had each acted knowledgeably, prudently and without compulsion.
1.2
Market Rent means the estimated amount for which a property, or space within a property, should lease (let) on
the date of valuation between a willing lessor and a willing lessee on appropriate lease terms in an arm’s-length
transaction after proper marketing wherein the parties had acted knowledgeably, prudently and without
compulsion.
1.3
The property not been measured by King Sturge. The provided building areas have been relied upon and for the
purpose of this report have assumed to have been measured in accordance with the current edition of the Code
of Measuring Practice issued by the Royal Institution of Chartered Surveyors and the Incorporated Society of
Valuers and Auctioneers.
1.4
Our valuations exclude any expenses which would be incurred on a realisation or disposal of any liabilities due to
taxation on disposal such as Capital Gains Tax or Value Added Tax/PDV. We have however taken account of
purchaser’s acquisition costs for investment valuations.
1.5
Our valuations reflect plant and machinery on the property only insofar as it does not form part of any
manufacturing process carried on therein but would be regarded by the market as an integral part of the land and
buildings for letting or sales purposes.
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TERMS & CONDITIONS FOR VALUATION SERVICES
1.
DEFINITIONS
In these Terms & Conditions :
1.1.
“the Client” means the person(s) or company to whom the Terms of Engagement are addressed and the person(s) or
company receiving the Services.
1.2.
“KS” means King Surge LLP an English registered limited liability partnership (registered number OC311501) whose
registered office is at 30 Warwick Street, London, W1B 5NH.
1.3.
“the Fee” means the fees payable by the Client in consideration of KS carrying out the Services.
1.4.
“the Property” means the location, site or building(s) which is the subject of the Services.
1.5.
“the Services” means the service(s) provided by KS in carrying out the Client’s instructions.
1.6.
“the Report” means any document, report, drawing specification, calculation, form or table which is written, produced
or created by KS in the course of carrying out the Services.
1.7.
“Letter of Engagement” means the letter which accompanies these Terms & Conditions which has been or will be
sent to the Client by KS and which sets out details of the Client, Services, Property and Fee together with such other
details relating to the Services as may be appropriate.
1.8.
“the Terms of Engagement” means this document together with the Letter of Engagement.
1.9.
If there is any inconsistency or contradiction between the Letter of Engagement and these Terms & Conditions, the
provisions of the Letter of Engagement will prevail.
1.10. From time to time it may be necessary to amend or supersede these Terms and Conditions by new terms. Where
this is the case KS will notify you of the changes and, unless we hear from you to the contrary within 7 days after
such notification, the amendments or new terms will come into effect from the end of that period.
1.11. As an English registered limited liability partnership KS is a body corporate and as such has "members" and not
"partners". However it is more usual for senior professionals to refer to themselves as "partners" and in common with
other professional firms our members have decided to retain the traditional title of "partner". Therefore where we
refer in these Terms of Engagement or otherwise to a person being a "partner" that title refers to either a member or
a senior employee of King Sturge LLP.
2.
APPOINTMENT AND LIABILITY
2.1.
The Client has instructed KS to undertake the Services and KS agrees to provide the Services in accordance with
the Terms of Engagement.
2.2.
KS shall provide the Services with all reasonable professional skill and care.
2.3.
The liability of KS for its own acts and omissions whether in contract or in tort or otherwise for any loss, injury or
damage sustained shall be limited in each of the following respects:
2.3.1. KS shall not in any event be liable for more than KS’s just and equitable proportionate share of the loss, injury
or damage assuming that all other professionals/consultants/specialists (either directly or sub-appointed) who
are responsible are equally obliged to exercise reasonable professional skill and care and that they have been
appointed on terms no less onerous and shall be deemed to have paid to the Client their just and equitable
proportionate share of the liability.
2.3.2. KS shall not in any event be liable unless proceedings by way of court action or arbitration or alternative
dispute resolution have been commenced within six years from completion of the Services.
2.3.3. subject to paragraph 2.5 the maximum liability of KS shall be limited to £20million for each and every claim
arising in connection with the Services.
2.3.4. no liability shall attach to KS either in contract or in tort or otherwise for loss, injury or damage sustained as a
result of any defect in any material or the act, omission or insolvency of any party other than KS and KS shall
not be liable to indemnify the Client in respect of any claim made against the Client for any such loss, injury or
damage.
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TRIGON CAPITAL
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2.4.
The Client will not be entitled to recover, and hereby disclaims and waives any right that it may otherwise have to
recover lost profit or revenues or indirect or consequential loss or damage as a result of any breach (including
without limitation, negligence) by KS of its obligations in respect of the Services.
2.5.
Nothing in the Terms of Engagement shall exclude or restrict KS’s liability:2.5.1. for death or personal injury resulting from KS’s negligence; or
2.5.2. for fraud, illegal or unlawful acts
2.6.
The duties and responsibilities owed to the Client in respect of the Services are solely and exclusively those of KS
and no employee or partner of KS (whether or not a member of King Sturge LLP) shall owe the Client any personal
duty of care or be liable to the Client for any loss or damage howsoever arising as a consequence of the acts or
omission of such employee or partner (including any negligent acts or omissions) save and to the extent that such
loss or damage is caused by the fraud, dishonesty, wilful misconduct or unauthorised conduct on the part of such
employee or partner. The Client will therefore not bring any claim personally against any individual employee or
partner of KS (other than in respect of those liabilities caused by fraud, dishonesty, wilful misconduct or unauthorised
conduct on the part of such employee or partner). The terms of this paragraph will not limit or exclude the liability of
KS for the acts or omissions of its employees or partners.
2.7.
If at any time any provision contained in the Terms of Engagement is or becomes illegal, invalid or unenforceable in
any respect, it will not affect or impair the legality, validity or enforceability of any other provision contained in the
Terms of Engagement.
3.
PAYMENT OF PROFESSIONAL FEES
3.1.
The Client undertakes to pay the Fee to KS for the performance of the Services in accordance with the Terms of
Engagement and at the rate set out in the Letter of Engagement (and any specific stage payment schedules).
3.2.
shall issue an invoice for the Services (or part thereof) and this will be payable by the Client within 28 days of the
date of issue of the invoice.
3.3.
KS reserves the right to charge the Client interest (both before and after any Judgement) on any unpaid invoices at
the rate of 3% per annum above the base rate for the time being at Barclays Bank plc from the date which is 28 days
after the date of the invoice until payment is made, or, at the sole election of KS, interest due under the Late
Payment of Commercial Debts (Interest) Act 1998.
3.4.
Where the fee is subject to the addition of expenses and disbursements these shall be payable by the Client as
invoiced and at the rates indicated by KS.
3.5.
The Fee shall be subject to the addition of Value Added Tax applicable at the time of the invoice.
4.
COMMENCEMENT AND TERMINATION
4.1.
The commencement of instructions under the Terms of Engagement will be on the date set out in the Letter of
Engagement.
4.2.
Either the Client or KS may terminate the KS appointment by giving 28 days notice in writing to the other party or
immediately in the event of either party having a receiver, administrative receiver or administrator appointed over all
or any part of its assets or undertaking or if either party passes a resolution to wind up or has a liquidator appointed
or, in the case of an individual, is adjudged bankrupt.
4.3.
In the event of termination of instructions for whatever reason, the Client shall pay all fees reasonably due to KS on
receipt of an invoice.
4.4.
The termination of instructions under the Terms of Engagement will not affect the rights of either party that have
accrued to the date of termination.
5.
COPYRIGHT
5.1.
The copyright in the Report and other documents produced by KS in connection with the Services (the "Proprietary
Material") shall remain vested in KS, but the Client shall have an irrevocable royalty-free and non-exclusive licence to
copy and use such drawings and other documents and to reproduce the designs contained in them for any purpose
related to the Services, including, but without limitation, the construction, reconstruction, completion, maintenance,
letting, promotion, management, sale, advertisement, reinstatement, repair, alteration, modification, extension and
use of the Property. Such licence shall carry the right to grant sub-licences and this licence and such sub-licences
shall be transferable to third parties. KS shall not be liable for any use of the Proprietary Material for any purpose
other than that for which the same was prepared and provided by KS.
6.
CONFIDENTIALITY
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TRIGON CAPITAL
6.1.
ROGOZNICA
CROATIA
The Report and Services provided to the Client will be treated by KS in confidence and KS will take reasonable steps
to keep such matters confidential as may be required by the Client in writing save for such information which:
6.1.1.
is now or hereafter becomes available in the public domain other than through the fault of KS or any of its
partners, employees sub-contractors or advisers
6.1.2.
is already or becomes known to KS or any of its partners, employees, sub-contractors or advisors at the
time of its disclosure
6.1.3.
is required by law by any court of competent jurisdiction, or by a governmental or regulatory authority, or
where there is a legal duty or requirement to disclose.
7.
THIRD PARTY
7.1.
The Report is supplied to the Client for the strict and limited purpose as intended and all information within the
Report may only be used by the Client. No liability whatsoever is offered to any third party without the express
written consent of KS.
7.2.
Except as set out in paragraph 2.6, the Contracts (Rights of Third Parties) Act 1999 shall not apply to the Terms of
Engagement.
8.
ASSIGNMENT
8.1.
Neither party may assign any of their respective rights or obligations under the Terms of Engagement to any third
party without the prior written consent of the other party.
9.
GOVERNING LAW
9.1.
The Terms of Engagement shall be governed by and construed and interpreted in accordance with the law of
England and Wales and the parties agree that all matters arising out of or in connection with these Terms of
Engagement shall be determined by the High Court of Justice in England and the parties hereby submit to the
exclusive jurisdiction of that Court for such purposes.
10.
COMPLAINTS PROCEDURE
10.1. KS has a formal complaints procedure in accordance with the requirements of the Royal Institution of Chartered
Surveyors. A copy is available upon request to KS.
11.
DEFINITIONS
11.1. "the Red Book" means the RICS Appraisal and Valuation Standards (5th Edition) published by the Royal Institution of
Chartered Surveyors as amended or revised from time to time. A copy is available for inspection upon request.
11.2. "the Practice Statements" means Practice Statements from time to time comprised in Part 3 of the Red Book,
compliance with which is mandatory upon members of the Royal Institution of Chartered Surveyors and the Institute
of Revenues Rating and Valuation (subject to limited rights to justify departure therefrom).
11.3. "the Valuation" means the KS assessment of the value of the Property including (but not by way of limitation)
Appraisals, Calculations of Worth and Valuations as defined in the Red Book which comprises the Services.
12.
THE VALUATION
12.1. The Valuation shall be carried out in accordance with the Terms of Engagement.
12.2. KS will state the status of the valuer (internal, external or independent) and disclose to the Client any previous
involvement, where applicable.
12.3. Where the purpose of the Valuation means compliance with the Practice Statements in the Red Book is mandatory,
then the Valuation will be carried out accordingly. In all other circumstances, KS reserve the right to carry out the
Valuation in accordance with such other procedures, principles or methodologies as KS deem to be appropriate.
12.4. The Valuation shall, according to the particular purposes of the Valuation, be carried out on the appropriate basis, or
th
bases specified in Part 3 of the Red Book (5 Edition).
12.5. Where special assumptions are necessary in order to adequately provide the Client with the valuation required, these
will be agreed and confirmed in writing between the Client and KS prior to the Report being issued. KS will only make
special assumptions if these can reasonably be regarded as realistic, relevant and valid, in connection with the
particular circumstances of the Valuation.
12.6. The Valuation reflects plant and machinery only insofar as it does not form part of any manufacturing process, but
would be considered by the market as an integral part of the land and buildings for letting or sale purposes.
57
TRIGON CAPITAL
ROGOZNICA
CROATIA
12.7. The Valuation is valid as of the date of valuation stated within the Report.
12.8. All measurements are carried out in accordance with the current Code of Measuring Practice issued by the Royal
Institution of Chartered Surveyors unless otherwise stated in the Report. A copy of the Code of Measuring Practice
is available for inspection on request.
12.9. Where the Valuation is to be reported in a currency other than that of the state in which the Property is located, KS
will state the currency in which it is to be expressed, the exchange rate adopted or source of exchange rate to be
adopted and the date on which it will be calculated.
13.
VALUATION ASSUMPTIONS
Sources of Information
13.1. The Client hereby represents and undertakes to KS that KS shall be entitled to rely upon information referred to in
the Report and provided by the Client or the Client's legal or other professional advisers or by third parties relating to
matters such as details of tenure, tenancies, use, contamination, town planning consents, historic trading accounts
and the like are complete and accurate And that there are no other material facts known to the Client relating to the
Property or the Client’s interest in the Property which may be relevant to KS in carrying out its instructions.
13.2. The Client acknowledges that KS shall not be obliged to inspect title deeds or other legal documents and KS shall be
entitled to assume, unless advised in writing to the contrary, that the Property enjoys good marketable title free of
encumbrances and unusual or onerous restrictions affecting its value. Where leases are provided to KS, a summary
of the relevant factors taken into account in any Valuation will be given in the Report and, in the case of specimen
leases of large portfolios, these will be taken to be representative of the whole unless KS is advised in writing to the
contrary. The Client acknowledges that the responsibility lies with it to obtain independent verification of KS
interpretation of any such documents before any Valuation is relied upon.
13.3. Except where disclosed to KS in writing and recorded in the Report, KS shall be entitled to assume the following as
appropriate:
13.3.1. the landlord's consent to alienate leasehold interests will not be unreasonably withheld or delayed;
13.3.2. vacant possession will be given of all accommodation occupied by the company, or its service tenants;
13.3.3. all necessary landlord's approvals have been obtained;
13.3.4. there are no tenant's improvements that will materially affect KS’s opinion of value;
13.3.5. tenants are responsible for all outgoings including (but not by way of limitation) all repairs, insurance, rates
and taxes, either directly or by way of service charge; and
13.3.6. there are no restrictive covenants, or unusual terms and leases which would materially affect KS’s opinion of
value.
13.4. KS shall not be obliged to make detailed enquiries into the financial status of tenants, or their ability to meet their
financial obligations under their leases. The Client acknowledges that the KS Valuation is based on KS general
understanding as valuers of the status of tenants and KS shall be entitled to assume, unless advised otherwise in
writing, that tenants are in compliance with their obligations under their lease with no arrears of rent, service charge
or material breaches of the lease which is likely to affect KS opinion of value.
1.
Structural surveys and deleterious materials
13.5. KS shall have regard to the general condition of the Property as might reasonably be observed in the course of an
inspection for valuation purposes, but unless specifically instructed in writing by the Client to carry out a detailed
condition survey of the Property, KS will not do so nor shall KS inspect those parts of the Property which are covered,
unexposed or inaccessible. Any obvious defects or items of disrepair shall be taken into account but in no
circumstances shall KS be deemed or construed to have given any assurance whether express or implied that the
Property is free from defect.
13.6. KS shall not be obliged to arrange for the testing of electrical, heating or other mechanical services and unless such
items are in an apparent state of disrepair they will be assumed to be in reasonable working order and in compliance
with any relevant statutory or by-law regulations.
13.7. KS shall not be obliged to arrange for any investigation to be carried out to determine whether or not high alumina
cement concrete, calcium chloride additive, asbestos, or any other potentially deleterious materials or techniques have
been used in the construction of any of the Property. Unless KS is informed in writing to the contrary, the Valuation
will be prepared on the assumption that no such materials or techniques have been used.
58
TRIGON CAPITAL
ROGOZNICA
CROATIA
13.8. Certain types of composite cladding panels contain combustible insulation which concerns certain insurance
companies. During the course of the KS inspection for valuation purposes KS will not be able to determine the
insulation within any composite cladding panels and recommend that the Client obtain assurances that the panels
have a suitable fire retardant quality and insurance is available.
2.
Site conditions and contamination
13.9. KS shall not be obliged to undertake or commission site investigation works or soil bearing tests in order to establish
the suitability of any Property for existing or proposed developments, or of the condition of embankments, retaining
walls, wharf and river walls and the like. Unless KS is advised in writing to the contrary, the Valuation will be prepared
on the assumption that these aspects are satisfactory in all regards and that, where development is contemplated, no
extraordinary expenses or delays will be incurred during the construction period due to site conditions or
contamination.
13.10. The Client acknowledges and agrees that in no circumstances will KS be deemed or construed to have given any
opinion or assurance that the Property has sufficient load bearing strength to support the existing constructions, or any
future development thereon. Similarly, in no circumstances shall KS be deemed or construed to have given any
opinion or assurance or guarantee that there are no underground mineral or other workings either beneath the
Property or in the vicinity of the same, nor that there is no fault or disability underground (including but not limited to
any contamination) which could or might affect the Property or any construction thereon.
13.11. KS shall not be obliged to carry out site surveys or environmental assessments or investigate historical records to
establish whether any land is, or has been contaminated. Unless instructed or agreed otherwise, in writing with the
Client KS shall make such reasonable enquiries as in KS’s professional judgment are necessary to establish the
existence and the probable extent of contamination, so as to consider the likely effect on value of such contamination.
Where the Client's initial instructions are to assume that no contamination exists, or the extent of necessary
investigation is significantly greater than anticipated, KS shall consult the Client and agree an amendment to in the
Terms of Engagement before incurring additional costs. If there is evidence of contamination and the cost of
rectification has been estimated by experts with appropriate experience, then this can be reflected in the Valuation. If
there is evidence of contamination, but its extent cannot be established for reasons such as absence of technical
skills, time available or costs, KS may negotiate with the Client an acceptable basis for undertaking the work.
Otherwise, unless advised by KS in writing to the contrary, all Valuations are carried out on the basis that the property
is not affected by environmental contamination.
Town Planning and other statutory regulations
13.12. The Client acknowledges and agrees that it is not always possible in the time available to obtain authoritative
information from local and statutory authorities concerning such matters as town planning and highway proposals. KS
shall make reasonable oral enquiries of local authorities but, unless KS is specifically advised in writing to the
contrary, KS is entitled to assume that the Property and its respective value would be unaffected by any matters which
would be revealed by a full local authority search. The Client acknowledges that the responsibility lies with it to verify
such matters before any Valuation is relied upon.
13.13. KS shall be entitled to assume that the Property has the benefit of full planning consent or established use rights and
complies with all relevant statutory regulations including fire regulations and that a fire certificate, if required, will be
issued if it has not already been issued.
14. WARRANTIES
14.1. Except as expressly stated in the Terms of Engagement, all warranties and conditions, whether express or implied by
statute, common law or otherwise are hereby excluded to the extent permitted by law.
14.2. The Client hereby warrants and represents that, to the best of its knowledge, information and belief, the information
supplied by or on its behalf to KS is true and accurate and that it will advise and will instruct its third party advisers to
advise KS in the event that it and/or they receive notice that any such information is either misleading or inaccurate.
59

REVALUATION INTERNAL PURPOSES LAND NEAR ROGOZNICA

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