Luxury Villa Development

PROJECT / ACQUISITION OPPORTUNITY:

KALUDJEROVINA, KOTOR BAY

LOCATION:

Kotor Bay, Montenegro (also called “Monte Carlo of Adriatics”), Southern Europe

BRIEF DESCRIPTION:

Excellent land within Zone Planning and with beautiful sea views just a “short stroll” away from the beach with good transport links at UNDER MARKET ACQUISITION PRICE.

Good opportunity for developers/investors to acquire a project with an estimated EUR 8.4million sales value (once developed) for only EUR 1.9million.

Quick Navigation:

I..Project Summary | II. Investment Summary | III. Sales Dynamics Estimate & Building Development Costs | IV. Montenegro Country & Economic Overview

I. PROJECT SUMMARY

Set in the famous Kotor Bay area of Montenegro coastline an opportunity has arisen for a development/investment company to acquire a strategically well placed land with urbanistic approvals for a luxury development of 3,000m2 in size set in 4 objects/buildings.

Being only 10min away from Tivat International Airport this location has a direct view over the famous islands of Saint Marko and The Island of Flowers. The area is already very popular internationally due to the fact that “Porto Montenegro” is building a 4th Generation Marina with 650 berths in immediate vicinity of this land along with the huge regeneration of the coastal area in Tivat to include “Four Seasons” Hotel together with a brand new luxury nautical village, Shopping Centre, Medical Centre and a Casino. It is no surprise then to find some well known names associated with that project, like Peter Munk, Oleg Deripaska, Nathaniel Rotschild to name a few.

Another testament to the potential value of this area can be found in the article in FORTUNE magazine on CNN MONEY:

http://money.cnn.com/magazines/fortune/fortune_archive/2007/10/15/100539069/index.htm

*Location map *Possible Concept Suggestion

With amazing views, worldwide interest from upmarket clientele and excellent transport links it is not hard to see a luxury development project realized on this location. Excellent land sloping allows building with unobstructed views, and that only adds to the appeal.

EUR 8.4million estimated developed project sales value is based on relatively conservative selling estimates. Considering low acquisition price set for this project, depending on sales dynamics, breakeven point for the development on this project could be achieved with relative ease.

II. INVESTMENT SUMMARY

• Equity investment = € 1.9million (full project/land acquisition)

• Equity stake = 100%

Below is the basic estimation/summary of the costs, profits and potential returns based on very conservative estimates and higher allowances for costs. Further details are in the Chapter III. Sales Dynamics Estimate and Building Development Costs

Building Costs Summary Estimated

• Municipal Taxes (for residential developments) = EUR 225,000

• Building/Construction costs = EUR 1,650,000

• Project Architectural Planning = EUR 60,000

• Project Documentation/Legal/Administration = EUR 30,000

Total Building Costs = EUR 1,965,000

• TOTAL investment cost (developed) = EUR 3,865,000

(Note: this estimate includes land acquisition cost)

• Estimated developed Project Sales Value = EUR 8,400,000

• Sales & Marketing Costs @ 5% of Gross = EUR 420,000

(Note: typical agency fees in the region are 2% up to a very maximum of 3% for top international agencies, but

higher margin given here can accommodate extra advertising and salaries for potential additional staff)

*Gross return per annum and Net return per annum refer to the average gross return per annum and average net return per annum respectively on linear basis for the overall 18 month project/full investment cycle estimated duration

III. SALES DYNAMICS ESTIMATE & BUILDING COSTS

These are all estimates given, for illustrative purpose, to be able to give a rough idea of the project scope. It is assumed that the sale of residences will begin as off-plan, so it is assumed that the part of the overall development is to be sold prior to commencement of actual works on the development. It is also assumed that the sale will be phased and that each subsequent phase carries a small increase in price.

1st Quarter Sales

First 750m2 residential space 750m2 @ EUR 2,500 per m2 = EUR 1,875,000

2nd Quarter Sales

Second 750m2 residential space 750m2 @ EUR 2,750 per m2 = EUR 2,062,500

Total Estimated Sales Value generated in the 1st HALF YEAR Sales = EUR 3,937,500

(Please Note: these are conservative estimates and it is assumed that only 1,500m2 of residential space will be sold during 1st Half YEAR of sales effort, and before the building commences)

--------------------------------- FULL INVESTMENT FINANCIAL BREAKEVEN POINT ------------------------------

Development and Sales Concept Description

• Building Gross Size: 3,000m2

• Residential Space: 3,000m2 price range: EUR 2,500 to EUR 3,250 per m2

Overall building costs BRIEF BASIC SUMMARY

• Project architectural plan @ EUR 20 per m2 3,000m2 x EUR 20 = EUR 60,000

• Communal fees and taxes @ EUR 75 per m2 3,000m2 x EUR 75 = EUR 225,000

• Building & Development Cost @ EUR 550 per m2 3,000m2 x EUR 550 = EUR 1,650,000

• Project Documentation/Legal/Admin @ EUR 10/m2 3,000m2 x EUR 10 = EUR 30,000

TOTAL building cost inc taxes = EUR 1,965,000 (for the whole development)

TOTAL investment inc land acquisition = EUR 3,865,000 (Total build cost + Land Acquisition)

1st HALF YEAR Sales Value Generated = EUR 3,937,500 (based on the estimate above)

SALES DYNAMICS ESTIMATE continued

It is also assumed that following the first Half Year sales effort works on the development are to start. For this size development (that is relatively small) it is estimated that the development works are to last for 12 months until finished product is in place.

Once the building works start the sales effort can continue and the prices can be increased again through further phasing of the project.

3rd Quarter Sales

Third 750m2 residential space 750m2 @ EUR 3,000 = EUR 2,250,000

4th Quarter Sales

Final 750m2 residential space 750m2 @ EUR 3,000 = EUR 2,250,000

Total Estimated Sales Value generated in the 2nd HALF YEAR Sales = EUR 4,500,000

Total Estimated Sales Value generated in the 1st HALF YEAR Sales = EUR 3,900,000

TOTAL GROSS ESTIMATED SALES VALUE GENERATED = EUR 8,400,000