Development Land Plot Varna

Reference number:	PP004
Country:	Bulgaria
Town:	Varna
Type:	Land bargain

The following, is a current land site that has just become available, and has been fully researched and found to be a top level development site.

Varna, in Bulgaria is the third largest city and is one of the fastest growing in the world in terms of real estate appreciation. It has the second largest airport in Bulgaria which is in the process expanding. It is the main international gateway to the Bulgarian Black sea coast.

Over the past three years there has been huge investment from both public and private sectors into the area. For example some of this investment has developed such infrastructure as to be in the process of water treatment and electrical plant's that will be of some of the best in the world.

The development land is positioned in a strategic hot spot where no previous development has taken place. Ravna Gora village is situated on 21km from Varna city. In order to reach the city you would travel by the main road between Varna and Burgas city. The main road is situated less than 0.5 of a kilometer from the site. The distance to the sea, and un spoilt beech is 5km. 4km from the village is situated the biggest river in North Bulgaria - Kamchiya. Ravna Gora is very strategically positioned. Some of the local villages - Kitka, Krusha, Bolyartsi, are all within a 5 Km radius.

There are no complexes built in nearby.

The village of Bliznatsi is famous with its new and expensive houses. Nearby is situated the resort of Kamchiya (where the river flows into the Black Sea). This resort is famous mainly to the Bulgarians and is used mainly by them. In the past few years it has become a popular camping area.

Real estates in Ravna area is well known for it's high market prices, due mainly to it's position. We have found that there has been a dramatic increase in interest for quality, ecologically, sound independent villas, especially situated in a gated community with all amenities and resources to hand, as well as being conveniently situated close to an International airport, main coastal road, secluded beech. This example is based upon this vision.

This document shows the total costs and end net profit. It also shows if we decided to exit at earlier stages in the project what the profits would be.

Apartment Block Project outline

The non regulated Land was bought by our company for €490,000 in 2006
Total Land Area 20,000 ². With an option of a further 5,000 ² (approx 5.3 Acres)
Thus the land price per square meter was €24.5 per ²

Exit 1

If the investor decided to keep the land and sell in 2008 without regulation they could have sold it at the market rate of 40Euro/meter2 = €800,000.00 This would have been €310,000.00 profit. If they decided to keep the land for another year, this may have resulted in approx the same increase again.

If the investors decided to put the land into regulation with a total cost of €40,000. This process would take just under six months. The municipality of Varna agreed high parameters for the land due to its position and aspect within the area. The investor will have the opportunity for a total saleable build area of 18,500 square meters. Consisting of a mixture of detached villa's, central complex including apartments, shops, all amenities etc.

Exit 2

If the investors decided to sell in 2009 with regulation they could sell the land with outline planning and regulation at the market rate of €200/meter2 = €3,700,000.00
This would result in a €3,170,000. profit.

The new investors would then employ the services of an architect to put the land through building permission. This process takes another two months. A further 3 month's would see the whole design of the project come together, which would result in a self contained high quality gated community village.

The architect costs are €15/meter2 with a total cost of €345,000. (15 x 23,000 ²)

Exit 3

If the investors decided to sell the land in 2009/10 with full building permission they would be able to sell it at the estimated market rate of Euro310/meter2 = €5,735,000.00
This would be €4,860,000. profit.

Construction Costs

• Build Cost €540 per ²
• Architecture and building permission €15 per ²
• Sundries €2.5 per ²
• Taxes €2.25 per ²
• Engineering Services
• Turnkey project management €50 per ²

Total Construction Cost (Based on a total built up area of 23,000²) = €14,024,250.00

Total Construction Cost Plus Land Cost of €490,000 + 40,000 = €14,554,250.00

As the saleable area is 18,500², this means that the investors must raise €632 per square meter for each apartment/villa/shop they sell to fund the total costs.

The land is positioned in a very sought after area in the Varna region with apartment/real estate prices being one of the highest in the country.

The apartments/villas in this area are currently being sold at 1350/meter2. Average villa apartment being sold for between 95,000 to 275,000 Euros.(Dependant upon spec and size)

Exit 3

As stated in our Land Investment Marketing Document, we have corporate businesses that can buy whole complexes in one deal. They do however want up to 30% discount.

If the investors decided to sell the off plan units in 2008/9 through our company network they could sell at the market rate of 945/meter2 (i.e. 30% discount on €1350).

This money would be released in stages over 18 months by the corporate to the investors as the project is built. Thus the investors can use the stage payment finance to fund the project and the remainder after costs is kept as profit.

As their total cost is €786/meter2, this means they are making €158/meter2. With a total saleable area of 18,500m2, their total profit = €2,923,000.00

Exit 4

If the investors decided to sell the project on the retail market at the current market rate of €1,350 per meter squared.

As the cost is €786 per meter squared the profit is €564 per meter squared. With the total saleable area of 18,500, the total profit is €10,434,000.00

A project of this nature would be to a large extent self funding with building blocks of ten to fifteen villa's in stages, or bigger blocks depending upon retail demand.

(All profits are subject to 10% profit tax (lowest in Europe)

My idea proposal would be to attract an investment partner that would be interested in an investment of 1,290,000.00 Euro's for a 49% stake in the complete project based on the Exit 4 concept with a large proportion of the villa's/property sold by our own company Pearl Property. Pearl Engineering would Project Manage the whole project through to completion. Setting new standard's in the Bulgarian market for top quality villa's together with a unique gated community. The entire project would be based upon final completion and profits declared within 5 years from start.

This would yield total net profits to the initial investor of 3,405,300.00 Euro's after Tax. As we have a well established web based sales and marketing Bulgarian Real Estate company we feel confident in having the ability to sell the gated development above, to the retail sector within the given time scale. We are of course open to other options and proposals.

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Pearl Property Ltd Bg, 37 Marshall St, London, W1F 7EZ, UK.
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