IMMOEAST Annual Report 2006/07

Sector
Short-term investment of capital with high returns
Figures that appear “negative” in the letable space statistics on the IMMOEAST property portfolio
are reflected in even more positive results in the analysis of performance. The capital invested in
these projects is tied up for a relatively short period of time, and the resulting returns lie far above
the comparable indicators for other areas of business in which IMMOEAST holds investments over
the long-term.
For this reason, IMMOEAST has defined the residential sector as a key growth area and will steadily
increase its commitment in these projects. The residential markets in the countries of Central and
Eastern Europe, South-eastern Europe, Ukraine and Russia have a higher potential for growth than
the markets for commercial properties over the mid- to long-term. The remaining supply of apartments
from the Communist era is large, but in poor condition in many cities with low prospects for
renovation or modernisation.
The growing middle class is no longer prepared to accept this standard of housing and is increasingly
in a position to finance the purchase of modern apartments. In combination with the demographic
shift from rural to urban areas that currently characterises the entire region, there is an
enormous undersupply of adequate housing above all in the capital cities and regional centres. This
development will create optimal conditions for investors, at least over the next one decades.
The most important projects started by IMMOEAST in 2006/07 include:
— Silesia Residential (Poland): in Katowice 980 apartments are under construction in four stages
next to the Silesia City Center, a shopping mall that is owned by IMMOEAST.
— Jandarmeriei Residential (Poland): the Jandarmeriei project involves the construction of office
space as well as 360 apartments.
— Century Residence (Slovakia): 400 apartments will be built at a central location in the capital
city of Bratislava.
— Francuska (Serbia): close to the city centre of Belgrade, 120 apartments and 148 underground
garage spaces are under construction.
St. Vlas & Koral Bay: strong demand for apartments
on the Black Sea
Report by the Executive Board 45
Highlights 2006/07
Business Model and Strategy
Portfolio Structure
Corporate Governance and Outlook
Property Portfolio
Development of Business
Consolidated Financial Statements
Service and Glossary
Short-term investment of of
capital leads to higher returns
compared with other sectors
SK, Bratislava,
Century Residence
Rising standard of living
and extremely low supply
create optimal market market and
growth opportunities
Silesia Residential
Jandarmeriei Residential
Century Century Residences
Residences
Francuska
A relatively small, but lucrative niche in the residential segment is the construction of holiday apartments
and second homes in popular tourism areas. IMMOEAST is currently constructing two complexes
with roughly 470 apartments on the Bulgarian Black Sea coast.
The Koral Bay and St. Vlas apartment complexes are located directly on the beach, and therefore
particularly attractive as second residences. The demand for these objects comes primarily from
countries in the west, above all Great Britain. A large number of the apartments in both objects have
already been sold, even though the properties are not yet completed.