Montport III Business plan

Montport III
1
Business
plan
d
Executive Summary
Majorca is a fantastic island, which captivates due to its natural
beauty, its easy accessibility from all major European cities and, of
course, 300 days of sunshine a year.
Majorca’s public has changed over the past few years – the island
has now become the meeting place of more discerning and
interesting people from all over the world.
The lively, multinational demand of the island’s property market has
led to a scarcity of attractive building land. For political reasons, as
well as due to a simple shortage of space, only a few profit-making
major projects still exist that are due to be completed.
The Montport III urbanisation comprises approx. 77,000 m² and is
situated in the coveted Port Andratx, in the South West of the island.
On 53 parcels of land of sizes ranging between 1,050 and 3,300 m²
qualitatively high-class detached family houses are being constructed
at an exposed location. The tranquillity, the privacy and the views
make these properties attractive to both local and foreign buyers.
Unique is the already existing infrastructure in the form of
canalisation (supply and waste water), electricity and extended
streets, including the appropriate lighting.
The calculated yield is approx. 35%, with price increases due to the
market development not yet being taken into account.
The marketing concept, drawn up by Engel & Völkers, includes
national print advertising, radio spots, as well as target group
oriented events. Engel & Völkers’ international distribution team has
many years of experience in the sale of detached family houses as
well as units in community facilities. In addition, a small selection of
competent competitors will assist in selling the project.
The intention is to design three different types of house, which differ
from one another in terms of size and possibly fittings. Exclusive
villas in the well-loved traditional Finca style are being constructed
here in a community.
Engel & Völkers management will intensively support the project from
the very start. All core competences not covered by Engel & Völkers
will be provided by renowned and established partners of many years
standing.
The purchase price of the pieces of real estate is EUR 30,850,000.
Spread over 4 phases (starting at the end of 2006) the Montport III
Montport III
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urbanisation will be completely finished within 5 years. House type A“Finca” (approx. 250 m² living space) will be available from prices
ranging up to EUR 1,790,000.00. Middle range house B- “Residencia”
(approx. 350 m² living space) will be acquirable from EUR
2,900,000.00. The ceiling of EUR 4,900,000.00 will be reached by
house type C – “Hacienda” (approx. 575 m² living space). The
intention is to construct 27 A – “Finca” houses, 17 B – “Residencia”
villas, as well as 3 type C- “Hacienda” detached family houses. In a
first phase of construction 4 A- houses, 4 B- houses and 2 C- houses
will be constructed. Due to the breakdown into phases, tendencies as
regards size and house type will be recognizable. The experiences
gleaned will then have a considerable effect on further planning with
regard to house types. The off-plan sale of approx. 20% of the
houses may also be expected.
Contents
Montport III
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Majorca’s property market
The project
Page 4
Page 5
Cost accounting Type A – “Finca”
Cost accounting Type B – “Residencia”
Cost accounting Type C – “Hacienda”
Page 7
Page 8
Page 9
Phase I
Phase II
Phase III
Phase IV
Overall overview
Page
Page
Page
Page
Page
Marketing
Distribution
Page 15
Page 16
Capital requirement & investment period
Total calculation
Page 17
Page 18
The team
Enclosures
Page 19
Page 20
10
11
12
13
14
Majorca’s property market
From 2001 to 2004 numerous “se vende” signs bore witness to an
excessive supply on the island. The Majorcan property market has
indeed changed since the end of the nineties. While badly located
inferior construction qualities were easier to sell as a result of the
stock exchange boom and the currency conversion, many price
conceptions had to be later adjusted. The customers, usually well
informed, have become more critical. This applies primarily to the
German buyers, whose high construction quality demands have
influenced the standard on the entire island. The lower and middle
price level was forced to register some heavy slumps in price.
Another plus are the favourable local financing conditions and tax
structuring options as regards properties. Majorcan and foreign
property owners have learned that the price development on the
island may take a few knocks back, but is on the upward climb in the
long term. If, for economic reasons, a nation breaks away due to
unfavourably developing currency relations or simply due to a
changed locational priority – for instance the Germans in particular
have been almost frantic to offload their properties since 2002 –
another one takes its place. Since 2001 the island has been
experiencing an increasing interest on the part of British buyers, and
currently the Germans are experiencing a perceptible comeback,
followed closely by the Spaniards. Such a situation ensures Majorca is
one of the few exceptional markets in the world. The island was
never really “out” and most salespeople have the time to wait for the
right customer.
Currently a soundly increasing price level is prevalent on the island,
dependent on location and property category. Particularly in the area
Montport III
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of high-class properties the demand has perceptibly increased in the
past 12 months.
What is sought is the Mediterranean style, stone Fincas combined
with high-class fittings and corresponding architecture.
In addition to absolutely tangible demands of the property such as,
for example, good construction quality, it must primarily be able to
fulfil the customer’s dreams, for instance with a beautiful view, a
romantic garden full of palms, a well or beautiful patio. What is
noticeable is the growing interest in discovering the original Majorca
with its typical properties in previously ignored regions. Overall it can
be noted that demands of the properties have increased. For the
most part, however, solid construction, central heating, airconditioning, double-glazing and good technical fittings are a must
nowadays.
Buyer nationalities 2005
Other
7%
Spanish 8%
British 45%
Germans 40%
The project
The port town of Puerto de Andratx is one of the most well-loved
addresses on Majorca and traditionally one of the most highly priced
areas of the island. Numerous exclusive villas and stately houses in
the slopes of the bay permit an extensive view of the landscape and
the sea. In addition to a noble yacht marina, Puerto de Andratx offers
numerous options for sport and leisure-time, exquisite restaurants
and bars, as well as diverse shopping options. Here over 50 percent
of the clientele comes from Germany, demand for the high-class area
in particular comes mainly from German buyers.
Overall, the demand in all segments increased by around 10 percent
last year, accordingly the marketing duration reduced slightly from 12
to 8 months. On average the price level is stable in all property
categories, with exaggerated price concepts having in the meantime
settled down into realistic values.
In 2002 12% of all properties offered were still pieces of real estate,
whereas in 2005 construction sites accounted for only 5% of the
remaining portfolio. The constant high demand for holiday homes has
led to the development of the last pieces of real estate in the coveted
locations. The remaining attractive construction sites in the coveted
South West of the island can be counted on one hand.
The pieces of real estate of the Montport III are particularly
distinguished due to the natural topography of the foothills of the
Tramuntana Mountain. Thus, the area soars in a north-south
direction and guarantees almost all properties views into the valley,
the surrounding mountains or the impressive panorama of the bay of
Andratx.
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The properties are suitable for profitable development of
constructions, as the cost-intensive excavation on the individual
parcels of land is comparably low. With very few exceptions, the
pieces of real estate are very flat in cross-section and in relation to
the view, which considerably reduces the planning and construction
costs.
With a surface of 200,000 m² the landscape conservation area
directly adjacent to the area presents itself as profitable for the entire
urbanisation. As the majority of the pieces of real estate border on
the above-cited green space, the pieces of real estate seem much
larger when subjectively observed. A project of this type is unique in
South West Majorca and is no longer freely available.
The superior detached family house buyer aspires to good to very
good locations and seeks qualitatively high-class houses, which
correspond to the current quality standard. That means that
frequently a conflict between location and construction quality occurs
– antiquated houses, which are difficult to market, frequently stand
on the best real estate. This is why the supply of new houses in
exposed locations is very small.
The American trend of communisation, the aspiration towards
community life, is also continuing in Europe. With the Montport III
project we are pursuing precisely these thoughts, by creating a
residence in the form of a luxurious Finca community. The
advantages of a security service combined with a standardised
cultivation of garden, pool and house ensure carefree use of the
property. With the Montport III project a community of villas is being
constructed, which is setting standards as regards quality,
recreational value and service in the port Andratx region. According
to current trends, generous and well-illuminated houses will be
constructed. Even in the medium range house type, a separate unit
will offer guests and business partners enough space and privacy.
The houses will be equipped with oil floor heating, air-conditioning
and a fireplace. During the development of the houses, particularly
great store will be set by the structure of the external areas: the pool
will be overly large, as will be the (covered) terraces and the
barbecue area. A reasonable garden also belongs to the basic fittings
of all the houses.
Already in the planning phase and in later construction activities, a
qualified Montport III distribution employee will be exclusively
charged with the project.
The goal is to place a successful investment, which is closely oriented
towards current customer wishes. As marketing leader in the area of
mediation of high-class properties Engel & Völkers can fall back as
reference on more than 370 mediated properties in 2005 alone. The
experiences gleaned, customer surveys, market analyses and the
certainty of knowing customer wishes with regard to architecture, are
an enormous advantage in creating a contemporary product. The
result will be a property, which fulfils tomorrow’s living trends, but is
steeped in the flair of a Majorcan village and thus guarantees a fast
sale.
The expert selected by Engel & Völkers will be in charge of the
project from its first day, to enable him/her to give buyers and
interested parties in-depth information at a later date.
Montport III
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Cost analysis House type A - "Finca"
No
Cost group
100
110
Preparation and development
Preparation
Total
200
300
Building - construction
Building - living space
Covered terraces
Terraces
Supporting walls
Total
400
410
500
d
7
Unit
EUR/m²
1
EUR
4.000,00
4.000,00
200
50
120
100
m²
m²
m²
m²
External facilities
Garden facility 1 global
Swimming pool 1 global
Total
1
1
global
global
20.000,00
20.000,00
40.000,00
Fittings
Kitchen
Total
1
global
25.000,00
25.000,00
600
610
620
630
640
650
Ancillary construction costs
Architecture
Technical architect
Project management
Topography, geological expert opinion & insurance
Licensing fees
Total
1
1
1
1
1
global
global
global
global
global
30.000,00
10.000,00
20.000,00
5.000,00
20.000,00
85.000,00
700
710
720
730
740
Distribution budget
Marketing including distribution brokerage
6% on sale price - real estate/house
8% for off-plan sale
Lawyer´s fees, construction contracts & sales contracts
Total
800
Unforeseeable risk
Total
Overall costs
Montport III
Business plan
Number
1.500
700
450
750
300.000,00
35.000,00
54.000,00
75.000,00
464.000,00
105.000,00
5.500,00
110.500,00
2
%
14.000,00
14.000,00
742.500,00
Cost analysis H ouse type B - "Finca"
No
Cost group
100
110
Preparation and developm ent
Preparation
Total
200
300
B uilding - construction
B uilding - living space
Covered terraces
Terraces
Supporting walls
Total
400
410
500
d
8
U nit
EU R /m ²
1
EU R
4.000,00
4.000,00
300
100
150
150
m²
m²
m²
m²
External facilities
Garden facility 1 global
Swim m ing pool 1 global
Total
1
1
global
global
25.000,00
30.000,00
55.000,00
Fittings
Kitchen
Total
1
global
30.000,00
30.000,00
600
610
620
630
640
650
Ancillary construction costs
Architecture
Technical architect
Project m anagem ent
Topography, geological expert opinion & insurance
Licensing fees
Total
1
1
1
1
1
global
global
global
global
global
30.000,00
20.000,00
20.000,00
5.000,00
30.000,00
105.000,00
700
710
720
730
740
D istribution budget
M arketing including distribution brokerage
6% on sale price - real estate/house
8% for off-plan sale
Law yer´s fees, construction contracts & sales contracts
Total
800
U nforeseeable risk
Total
O verall costs
Montport III
Business plan
N um ber
1.500
700
450
750
450.000,00
70.000,00
67.500,00
112.500,00
700.000,00
180.000,00
5.500,00
185.500,00
2
%
22.000,00
22.000,00
1.101.500,00
Cost analysis House type C - "Hacienda"
No
Cost group
100
110
Preparation and development
Preparation
Total
200
300
Building - construction
Building - living space
Covered terraces
Terraces
Supporting walls
Total
400
410
500
d
9
Unit
EUR/m²
1
EUR
4.000,00
4.000,00
500
150
250
200
m²
m²
m²
m²
External facilities
Garden facility 1 global
Swimming pool 1 global
Total
1
1
global
global
40.000,00
40.000,00
80.000,00
Fittings
Kitchen
Total
1
global
40.000,00
40.000,00
600
610
620
630
640
650
Ancillary construction costs
Architecture
Technical architect
Project management
Topography, geological expert opinion & insurance
Licensing fees
Total
1
1
1
1
1
global
global
global
global
global
30.000,00
25.000,00
20.000,00
5.000,00
50.000,00
130.000,00
700
710
720
730
740
Distribution budget
Marketing including distribution brokerage
6% on sale price - real estate/house
8% for off-plan sale
Lawyer´s fees, construction contracts & sales contracts
Total
800
Unforeseeable risk
Total
Overall costs
Montport III
Business plan
Number
1.500
700
450
750
750.000,00
105.000,00
112.500,00
150.000,00
1.117.500,00
294.000,00
5.500,00
299.500,00
2
%
33.510,00
33.510,00
1.704.510,00
Phase I
Nr.
1
2
3
4
5
6
7
8
9
10
11
Parzelle
8C/7C
198
6C
10B
192/193
9C
19C
18C
17C
16C
31C
Total
** Fitness, Indoorpool & Spa
Montport III
Business plan
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10
m²
3.140
3.300
1.723
1.554
2.300
2.273
1.050
1.200
1.100
1.050
1.300
19.990
Reasl Estate PP
1.570.000
1.485.000
830.000
620.000
1.035.000
1.150.000
395.000
450.000
415.000
395.000
420.000
8.765.000
Type
C
C
B
B
B
B
A
A
A
A
A
Villa PP
1.700.000
1.700.000
1.120.000
1.120.000
1.120.000
1.120.000
760.000
760.000
760.000
760.000
760.000
PP complete
3.270.000
3.185.000
1.950.000
1.740.000
2.155.000
2.270.000
1.155.000
1.210.000
1.175.000
1.155.000
1.180.000
Asking Prices
4.900.000
4.900.000
2.900.000
3.250.000
3.250.000
3.250.000
1.790.000
1.790.000
1.790.000
1.790.000
1.530.000
11.680.000
20.445.000
31.140.000
Profit
10.695.000
Yield
52,31%
Remarks
Amalgamation de 8C & 7C
Amalgamation 192 & 193
Country Club***
Phase II
Nr.
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Parzelle
5C
4C
3C
2C
1C
25C/5D/4D
15C
16B
15B
1D
2D
21C
22C
23C
Montport III
Business plan
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11
m²
1.640
1.660
1.621
1.621
1.575
3.015
1.400
1.339
1.310
1.190
1.180
1.390
1.415
1.315
Real Estate PP
790.000
760.000
725.000
725.000
710.000
815.000
450.000
625.000
610.000
420.000
420.000
510.000
520.000
480.000
21.671
8.560.000
Type
B
B
B
B
B
B
B
A
A
A
A
A
A
A
Villa PP
1.120.000
1.120.000
1.120.000
1.120.000
1.120.000
1.120.000
1.120.000
760.000
760.000
760.000
760.000
760.000
760.000
760.000
PP complete
1.910.000
1.880.000
1.845.000
1.845.000
1.830.000
1.935.000
1.570.000
1.385.000
1.370.000
1.180.000
1.180.000
1.270.000
1.280.000
1.240.000
Asking Price
2.900.000
2.900.000
2.900.000
2.900.000
2.900.000
3.400.000
2.900.000
1.950.000
1.950.000
1.790.000
1.790.000
1.790.000
1.790.000
1.790.000
13.160.000
21.720.000
33.650.000
Profit
11.930.000
Yield
54,93%
Remarks
Amalgamation 25C, 5D & 4D
Phase III
Nr.
26
27
28
29
30
31
32
33
34
35
36
37
38
39
Parzelle
14B
13B
7B
2B
8B
9B
12B
11B
26C1
26C
6D
28C
27C1
30C
Montport III
Business plan
d
12
m²
1.482
3.084
1.545
2.825
1.348
1.236
1.211
1.185
1.070
1.030
1.010
1.010
1.010
1.500
Real Estate PP
725.000
1.220.000
620.000
1.130.000
540.000
495.000
485.000
475.000
295.000
270.000
250.000
250.000
250.000
480.000
20.546
7.485.000
Type
B
B
B
B
A
A
A
A
A
A
A
A
A
A
Villa PP
1.120.000
1.120.000
1.120.000
1.120.000
760.000
760.000
760.000
760.000
760.000
760.000
760.000
760.000
760.000
760.000
PP complete
1.845.000
2.340.000
1.740.000
2.250.000
1.300.000
1.255.000
1.245.000
1.235.000
1.055.000
1.030.000
1.010.000
1.010.000
1.010.000
1.240.000
Asking Price
2.900.000
3.400.000
2.900.000
3.200.000
1.790.000
1.790.000
1.790.000
1.790.000
1.790.000
1.790.000
1.790.000
1.790.000
1.790.000
1.790.000
12.080.000
19.565.000
30.300.000
Profit
10.735.000
Yield
54,87%
Remarks
Phase IV
Nr.
40
41
42
43
44
45
46
47
48
Parzelle
6B/5B
3B
1B
4B
25C1
194
195
196
197
Montport III
Business plan
d
13
m2
2.899
2.554
2665
1.371
1.060
1.150
1.100
1.050
1.025
Real Estate PP
1.160.000
1.020.000
1.070.000
545.000
295.000
517.000
495.000
473.000
460.000
14.874
6.035.000
Type
C
B
B
A
A
A
A
A
A
Villa PP
1.700.000
1.120.000
1.120.000
760.000
760.000
760.000
760.000
760.000
760.000
PP complete
2.860.000
2.140.000
2.190.000
1.305.000
1.055.000
1.277.000
1.255.000
1.233.000
1.220.000
Asking Price
4.900.000
3.200.000
3.200.000
1.790.000
1.790.000
1.790.000
1.790.000
1.790.000
1.790.000
8.500.000
14.535.000
22.040.000
Profit
7.505.000
Yield
51,63%
Remarks
Amalgamation de 6B und 5B
Montport III
Business plan
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14
Marketing
Around the completely new structured Homepage montportIII.com
high gloss trilingual sales brochures including ground plans and
meaningful pictures (for sample see enclosure “La Molazul”) will
provide interested parties with an overview of the project. The
Montport III product will be presented in just as much detail as the
macro location of Majorca or the location of Port Andratx.
A DVD (for sample see enclosure ref. 1074618) on the houses,
project history and the philosophy has been created to this end.
During the planning phase, and naturally for the later off-plan sale,
computer animations of the sample houses or models (scale 1:50)
will be used, in order to compensate for any lack of fantasy or
imagination on the customer’s part.
In addition to the Internet, traditional print advertising is an
important marketing tool, which we will employ both regionally and
internationally. In so doing (international) daily newspapers and real
estate magazines should be taken into just as much account as inflight, yachting or golfing magazines. The placing of editorial
contributions, which usually reach a large circle of customers, are
other options. The qualified distribution of the above-cited sales
brochures by premium partners or targeted mailings is an integral
part of the print campaign for Montport III.
Regional awareness is achieved via advertising boards in South West
Majorca, the project presence in the various Engel & Völkers shops,
local radio advertising and an onsite major event including press
conference as a kick-off to the project.
Moving pictures combined with a musical underscore ensure more
emotions and a better orientation for the interested party still sitting
in front of his/her home computer screen.
Montport III
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15
The available infrastructure on the first house buyer markets of
approx. 110 Engel & Völkers offices (Germany, Spain, Great Britain,
Switzerland, Austria, Scandinavia, France & Benelux countries) are to
be used by so-called project road shows on site.
This presence will be supported by visits to exhibitions in Munich
(EXPO-Real), Moscow (Extra-Vaganza), and London (Property-Show).
Distribution
Engel & Völkers has been represented on Majorca since 1999 when
the first office was opened in Port Andratx. Now over 220 franchise
offices represent the brand throughout the world. Engel & Völkers is
already represented in the following European countries:
In the cooperative distribution for which Engel & Völkers is
responsible, the major broker companies of the island (Kühn &
Partner, Profi-Konzept, First-Mallorca, Nova-Inmobiliaria & Kensington
Properties) and local agencies from Port Andratx are allowed to
distribute the newly constructed houses. This ensures that the
important distribution responsibility rests on not one but several
shoulders.
Good product knowledge is the prerequisite for the successful sale:
the onsite Montport III sales office is the contact point for all the
above-cited brokers and the Engel & Völkers sales personnel. There,
a distribution specialist works side by side with the architect and the
project management, to enable him/her to present the urbanisation
to interested parties with the necessary detailed knowledge.
In 2006, the original Hamburg company maintained 26 offices on the
Balearean Island alone.
Only on Majorca do more than 100 distribution employees sell most
of the residential properties to foreigners and mainland Spaniards.
The multination sales team is just as able to serve British, German
and Spanish clients in their mother tongue as to serve people from
Scandinavia, Russia, France or the Benelux countries.
Montport III
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16
The Hamburg-based International Project Marketing Department
specialises in the distribution of precisely this type of property. The
colleagues develop customised marketing and distribution concepts,
by which many customers in the two essential domestic markets
(Great Britain and the German-speaking region) are acquired. The
customers attained can call a local telephone number and are of
course supported and advised in their national language. The
organisation of the Majorca trip is just as much part of the service as
is the intensive customer “briefing”.
Capital requirement and investment period
a maximum of 12 weeks in Spain.
A 10% deposit in the amount of EUR 3,085.000.00 should be paid by
31.06.2006 as part of an option contract.
The construction plans and licensing costs amount to approx. EUR
1,100,000.00 (including lawyer and notary costs)
The residual payment of EUR 27,765,500.00 of the pieces of real
estate to be acquired then ensues by 31.07.2006.
During construction phase 1 approx. EUR 11,680,000.00 should be
calculated, which – depending on the construction progress – should
be paid by the end of 2007. Local banks are expected to finance up
to 80% of the construction costs.
A pre-financing of the 16% turnover tax of approx. EUR 4,850,00.00
should also be taken into account prior to the authentication of the
properties. An application for reimbursement may be made as of
January 2007, with the reimbursement duration possibly lasting up to
Montport III
Business plan
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17
The further phases of development will ensue according to
construction progress and the success of the sale.
Summary of the phases I, II, III & IV
Nr. 1 - 11
Phase I
Total
Nr. 12 - 25
Phase II
Total
Nr. 26 - 39
Phase III
Total
Nr. 40 - 48
Phase IV
Total
TOTAL
Phase I - IV
AP = Asking price
PP = Purchase price
Montport III
Business plan
d
18
m² real estate
PP complete
AP house complete
19.990
20.445.000
31.140.000
m² real estate
PP complete
AP house complete
21.671
21.720.000
33.650.000
m² real estate
PP complete
AP house complete
20.546
19.565.000
30.300.000
m² real estate
PP complete
AP house complete
14.874
14.535.000
22.040.000
77.081
76.265.000
117.130.000
Profit
40.865.000
Yield
53,58%
The team
Project distribution
Architecture &
project management
– according to tender -
Construction company
– according to tender -
Bank
– according to tender -
Marketing
Claudia Dubois, Christine Möller
& Katrin Mentzel
Tax law
Bufete Feliu, José Luis Feliu
Legal advice
CSM Abogados, Manuel Cerdó
Montport III
Business plan
d
19
Andreas Heider, Malte Frank &
James von Enden or
International Project Marketing
Enclosures
Reference properties
Enclosure 1
Expert opinions of 20 Montport III properties Enclosure 2
Engel & Völkers market report 2005
Enclosure 3
Montport III
Business plan
d
20
Montport III – DVD
Sales brochure “La Molazul” + DVD
Enclosure 4
Enclosure 5
Cost estimate CSM Abogados
Cost estimate construction company Baltyc
Cost estimate architect Rainer Göttsch
Enclosure 6
Enclosure 7
Enclosure 8
Reference properties – overview
Reference
Reference
Reference
Reference
Reference
Reference
Reference
1070332
1039964
1013639
1028815
1074745
1051440
1044397
Montport III
Montport III
Business plan
d
21
Sale price
Living space
Price per square metre
EUR 5,000,000
EUR 1,885,000
EUR 2,250,000
EUR 2,950,000
EUR 3,400,000
EUR 2,810,000
EUR 1,900,000
Ø EUR 2,662,000
approx. 555 m²
approx. 305 m²
approx. 260 m²
approx. 350 m²
approx. 490 m²
approx. 400 m²
approx. 300 m²
Ø 369 m²
ca. 9,000 EUR/m²
ca. 6,200 EUR/m²
ca. 8,650 EUR/m²
ca. 8,450 EUR/m²
ca. 6,950 EUR/m²
ca. 7,000 EUR/m²
ca. 6,350 EUR/m²
Ø 7,480 EUR/m²
Ø EUR 2,269,000
Ø 327 m²
Ø 6,900 EUR/m²