Increasing profitability of rental apartments

News from the Dune Restaurant Café Lounge

2016 (1)

www.firmusgroup.pl

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The customers trust usSummary of 2015 Interview with Stein Christian Knutsen, the President of Firmus Group

The highest number of apartments sold in a year on the one hand. On the other - the broken record of the value per one square metre of a holiday apart-ment at the Polish seaside. Firmus Group, a group of developer companies investing in Mielno, can consider last year very successful.

The success in the form of 114 apartments sold by Firmus Group last year was possible thanks to the completion of a develop-ment called Rezydencja Park and commencement of two new ones: Rezy-dencja Park Rodzinna (32 premises) and Dune B (151 apartments). All of them are located in Mielno on the Baltic Sea.

Dune B apartment building turned out a real hit in the of-fer by Firmus Group in 2015. This was the second out of three Dune Resort parts, ho-using about 350 apartments altogether. The construction process was started at the end of last year’s holidays and sale was commenced at the same time. As at the year’s end, 90 out of 151 premises offered were sold (over 60 per cent) . All the same, the value of the sold utility area in the entire development (apartments in Dune A and B,

parking spaces and storage areas) was close to 130 mil-lion PLN.What caused such a big in-terest in the development?

Stein Christian Knutsen – the President of Firmus Group, says: The important aspect is not only its pre-stigious location, literally only a few steps from the beach, but also the custo-mers’ trust towards us as a developer and the anticipa-ted end result which surely appeals to the imagination. The customers are not di-scouraged by prices frequ-ently higher than requested by our competitors as they are certain that the purcha-se will be worth it and they will get the invested money back plus some earnings, if they buy the apartments for commercial purposes. And if they buy them solely for their own needs, they know they will own truly unique properties. Are apartments by the sea good investment?

That’s just a fact and has been thoroughly proven al-ready.

continued on pages

Stein Christian Knutsenthe President of Firmus Group

(Translated to English from the original version in Polish language)

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Summary of 2015

The customers trust usInterview with Stein Christian Knutsen, the President of Firmus Group

What is most important to point out in this is that this is not a result of a “pyramid game” but that it is based on economic sense. When You earn between 7-12% on your investment in an apart-ment and You can borrow money from the bank for 2,5-3,5% - You would be sil-ly not to use the opportunity.

We see this by existing customer, who already have bought an apartment, are buying more apartments and following us from project to project. They have seen the light and discovered that in-vesting in an emerging eco-nomy is good business.

Except for the best loca-tions in Capital cities and Financial Metropoles, apart-ments with sea frontage are always the most expensive residential real estate which money can buy. This is a glo-bal phenomenon and no-thing particular for the Polish sea side. The best locations and with the best quality will always be the most expensi-ve – They will increase in pri-ce the most over time. Even in bad times, the best loca-tions and quality will always be more sustainable.

This might become very particular for Poland, since Poland has one of the smal-lest coastlines per capita ba-sed on the markets which we compare ourselves with. Prices in Dune are not low? When/if/ will they pay back? Are there any reliable calculations?

In my opinion our prices in Dune have always been too low and that’s why we keep on increasing them for every project and the closer we get to completion.  The fact that earlier buyers also buy more apartments in new projects are also a confirmation of

this – They read the numbers and see the profits.

We have two very profes-sional companies who are operating apartments in Dune for other owners and their statistics are impressive.

Like I mentioned – owners see from 7-12% profits from their apartments after sha-ring income with the ope-rator. This should not be po-ssible in a fully functioning market when the interest rates are so low. It’s like pic-king-up money on the street.

It means that we should dramatically increase the pri-ces and/or not sell any apart-ments at all – just keep all the apartments for ourselves and by that also the profits.

When it comes to increase of value I strongly believe that the prices in Dune will over the next years increase with 50% as the whole re-sort becomes completed. How many Apartments are already sold in new Dune?

The exact number I don’t know as this increases daily, but I think that it is around 85 apartments with a total sales amount of 75 million zloty.

This represents approxi-mately 60% of sales for the project.

Based on the fact that we still just have a “hole in the ground” and another 18 months of construction ahe-ad of us it can only be inter-preted as the buyers have trust in us and in the quality which we deliver.

Having a privately-owned seaside apartment offers an opportunity for a comfortable stay and earning safe incomeSurely, income twice that of a bank deposit and having a possibility to make a trip to the Baltic Sea at any time are the most important arguments in favour of investing in a seaside apartment. The profitability from renting out apartments is increasing and due to this the whole market is growing.

Sixty percent of Poles spending holidays in Poland invariably decide to go to the

seaside. It has not changed for years. On the other hand, holiday accommodation fa-cilities are expected to meet higher and higher require-ments. Poles look for conve-nience and find it, among others, in new apartment bu-ildings.

Luxurious seaside apart-ments are offered by Firmus Group which operates in Mielno (Western Pomerania province). This developer’s offer may be used to illustra-te current market trends.

Firmus has already imple-mented several apartment investment projects in Miel-no, while others are pending. A three-part Dune Resort is its flagship project. Its first part called Dune A has been operating for more than two years. All of the 114 apart-ments that it consists of have been offered for sale and have already acquired their new owners. Just like over 60 percent of 151 premises designed in Dune B, which is currently under construction.

It turns out that persons who purchase apartments to rent out are mostly intere-sted in relatively small, stu-dio type (single-) and two-ro-om ones. Apartments of this type are still on offer in Dune B. What makes them so po-pular? This can be explained by information provided by Marcin Kokot of City Apart-ments, the company having several years of experien-ce in this sector, one of two companies commissioned by the owners to handle DUNE A apartments.

City Apartments is in char-ge of apartments which have achieved even a 50-per-cent rental income growth year-on-year! Marcin Kokot explains that this has been achieved thanks to both a

larger number of days on which the apartments were rented to visitors as well as an average 8-percent incre-ase in rental rates that took place in 2015: ‘We were able to quote higher prices than in 2014 because Dune facility had become a recognisable brand. An increased interest in renting studio-type apart-ments was also caused by the fact that in 2015 we hi-ghly emphasised the need to prepare an offer that would be attractive to a new target group, namely those who vi-sit the Middle Pomerania re-gion on business’, continues Marcin Kokot. ‘They mostly come off-season and perce-ive apartment rental as an alternative to a typical hotel room. For ten years our com-pany has been offering a gro-up of apartments intended for this category of custo-mers. In 2015, we decided to extend the group by adding DUNE apartments. The effect has been spectacular. We have recorded a noticeable increase in one- and two-day stays. This has translated into the financial result’.

According to Marcin Ko-kot, apartment owners will continue to achieve higher income when the other part of the Dune Resort complex is put in use. It will house an all-year-round SPA & Well-ness centre with a complex of swimming pools, jacuz-zi, wellness treatment and message parlours. ‘This will give a whole new perspecti-ve’, anticipates Marcin Kokot. ‘Tourists who search booking platforms often tick swim-ming pools in search filters as an important selection crite-rion. They do so even if later the pools are not used. Once DUNE B apartment building is put in use, the complex will become an all-year-round fa-cility. I hope that average oc-cupancy rate may then reach even 80-90 percent’.

However, even the current results are already impres-sive’. Compared to 2014, in 2015 average return on invested capital (for all ty-pes of DUNE apartments, i.e. studio, two- and three--room ones) increased by 1 percentage point. Therefore, anyone whose apartment in-vestment recorded in 2014 a 7-percent profitability per annum, last year could enjoy an eight-percent return on in-vested capital.

That’s a lot, when you consider the fact that the market offers mortgages at interest rates of below 4 percent per annum. Artur Tomaszewski, credit advisor, explains, ‘For anyone who invests 15 percent of his own resources and finances the remaining investment value with a mortgage at the lowest interest rate sin-ce 1989, currently approx. 3.7 percent, purchase of a seaside apartment beco-mes one of the most profi-table investments, highly competitive compared to bank deposits for example. Taking into account additio-nal benefits resulting from refund of the goods and services tax, in the amount of 8 percent of the price of residential premises and 23-percent in case of a par-king place and a constant steady increase in immova-ble property prices in Po-land, the period of return on this type of investment becomes even shorter.

Following this way of thin-king, it is really possible to re-pay a loan taken to purchase an apartment within more or less 10 years, and in conse-quence become an owner of immovable property located in an attractive tourist resort. Then, one may rent out the property, live there (e.g. upon retirement) or put it up for sale collecting a large sum of money on a one-off basis.

In 2015, the number of days in DUNE during which the apartments “worked” for their owners increased. Two-room apartments were among those most frequen-tly rented. Average number of days during which they were occupied by guests amounted to nearly 180, and one of them was even occu-pied for 220 days a year.

However, the highest profi-tability - upon confrontation of the revenue generated and capital involved in the purchase - was recorded for the smallest studio-type apartments. Interestingly, the best results were achieved by an apartment which does not even have a sea view, but is instead provided with a ter-race and a small garden. ‘This proves that guests apprecia-te and rank high in booking platforms properly prepared and furnished apartments as well as additional services at an appropriate level, be it the quality of breakfast served at the restaurant or permanent availability of a fitness room’, explains Marcin Kokot of City Apartments. ‘Of course, our efforts as a professional rental operator are not me-aningless either. The fact for example that the offer is pro-moted on a number of spe-cialist platforms and the in-formation reaches potential customers through multiple channels. We have already gained a lot of experience in this respect, and it pays off. That is why, in the summer we have recorded a nearly one hundred percent occu-pancy rate. Excluding busi-ness customers, visitors stay in DUNE on a regular basis - beginning from Easter until late September, which means that the season is getting lon-ger. This is beneficial for Miel-no as well, since apartments for sale purchased to be ren-ted out draw an attractive group of wealthy guests’.

Visualization of Dune B

(Translated to English from the original version in Polish language)

(Translated to English from the original version in Polish language)

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Sales OfficeMielno, Piastów 1A/E Street+ 48 94 342 22 22www.firmusgroup.pl

news

Summary of 2015

The customers trust usInterview with Stein Christian Knutsen, the President of Firmus Group

This is very satisfying to observe – There is no better marketing than a satisfied customer!Where are the buyers from? Who are they?

The buyers are mainly from the larger cities in Poland.

They are mainly business owners or executives in pri-vate businesses.

But, we also start to see fo-reigners buying – even tho-ugh we have not done ANY marketing abroad.

In fact, we have one buyer from European Royalty and a film director from Holly-

wood already as buyers, so it can be interesting to fol-low the paparazzi activity at Dune in the future.What shall be done to make people come by the Baltic sea also in autumn or winter?

A lot of people are already coming, but the potential is much much larger.

It’s very simple – Pe-ople want more facilities of quality and diversity.

A wider specter of servi-ces and facilities will open the potential to Polish as well as international custo-

mers.Why are people going to

Mazury in the winter? Look at the trees and the lakes?

Why are people going to Zakopane and the mounta-ins when there are no snow?

-  No, they are going the-re because that they have more to offer. Spa, entertain-ment, culinary experiences, medical treatments, educa-tional events as well as cor-porate events.

The corporate market with conferences and larger faci-lities will be very important for Mielno in the future.

Rezydencja Park Rodzinna takes the final stretch Finishing works in the apartment building Rezydencja Park Rodzinna are coming to an end. The complex with 32 apartments is located at Orła Białego Street in Mielno. The official opening is planned for the beginning of May this year. Almost half of the apartments have already been sold. It is the third building that the Construction Company Kuncer built for Firmus.

Previous investment projects are four ne-ighboring apartment buildings in the com-

plex of Rezydencja Park.The success of this inve-

stment prompted Firmus Group to design and build Rezydencja Park Rodzinna offering 32 two- and three--room apartments with an average area of 36 to 53 sqm, and three apartments of 71 sqm. “The idea of small apart-ments was a success,” says Cezary Kulesza, Marketing and Sales Manager in Firmus. “Customers appreciate the functional layout of the ro-oms, the high standard of fi-nish as well as the furnishing.”

The architecture of Re-zydencja Park Rodzinna resembles the style of the adjacent complex. The fa-çade is decorated so it lo-oks like timber-framed construction, which is a di-stinguishing feature of the buildings’ exterior, making a reference to one of the most characteristic ways of historic construction in the region of Pomerania.

Each apartment of Re-zydencja Park Rodzinna is equipped with a terrace or a spacious balcony. Their area varies between 8 and 21 sqm, depending on the apart-ment. 20 parking spaces were designed in the garage area,

located in the lowest floor of the building, another 12 – outside, within a closed area. The building is equipped with an elevator and a spacious re-ception lobby.

Apartments in Rezydencja Park Rodzinna will be deli-vered on a ‘turnkey’ basis, meaning hardwood floors, tiled floors and complete fixtures in the bathrooms, internal doors with natural veneer finish, and furnished kitchens equipped with bu-ilt-in Bosch household ap-pliances.

Over 40 percent of the apartments in Rezydencja Park Rodzinna have already been sold. The developer obtained the average price of 8,500 PLN (gross price)/1 sqm.

Two-bedroom apartments are the most popular. Most of the buyers live 2-3 hours drive from Mielno. They tre-at the apartments as their

second homes. They intend to use them often, but at the same time, they are intere-sted in commercial letting, so when they are away from Mielno, they can profit from rent. A professional company takes care of finding indivi-duals interested in renting, and provides day-to-day servicing and maintenance. The revenues generated from intensive renting exceed the costs of a mortgage loan, making buying an apartment a better investment than for example a bank deposit.

Firmus is preparing in-terior designs of display apartments that will be re-ady in spring. During the first visit, clients interested in the purchase will be able to feel like in their own flat. They will have a choice to buy fully furnished apart-ments or furnish them on the-ir own.

Visualization of Dune Resort

Laying the foundation stone of Dune B

Visualization of Rezydencja Park Rodzinna

(Translated to English from the original version in Polish language)

(Translated to English from the original version in Polish language)

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Live music has been present every Friday at the Dune Restaurant Cafe Lounge since De-

cember last year. Dominik Kępa, Restaurant Manager, explains: “We promote local musicians, but we are open to everybody who would like to play at our place. We have planned shows by pe-ople who already made it big, for example in TV pro-grammes like ‘Poland’s Got Talent’. We’ll have musicians known to wider public, but also total debutants. We prefer good mood genera-ting music styles. That’s why we choose soul, smooth jazz, ballads. In our series of events, there will also be a place for rock but acoustic one and vocals accompa-nied by the guitar. Guitar, sa-xophone, piano and strings prevail. Sometimes music coincides with our weekly culinary topics. In warmer seasons, we plan concerts of somewhat bigger music bands, who will perform on the restaurant’s terrace. ”

Currently, the music starts at 7 p.m., when our guests arrive for Friday dinner. As an exception, during the Valentine’s Day week the musicians will play at Dune Restaurant Cafe Lounge

every day, and an occasional gift will be waiting for each Female Guest.

As Dominik Kępa says, during summer, there will be live music three times a week, usually accompany-ing other events planned in the beach club. “When we propose our guests an eve-ning with Mexican cuisine and tequila, it will be accom-panied by Latino rhythms. The same for other kinds of music. We want our regular

events to be diversified, so all clients can find some-thing interesting for them-selves”.

Thinking of well-being of the youngest guests, the restaurant arranged the Kids Corner. “We prefer the Polish name equivalent ‘Ką-cik Najmłodszego Gościa’,” emphasizes Dominik Kępa. “It’s a place where kids can find challenges for themse-lves, while adults are busy at the table. They have at

their disposal puzzles, logi-cal games, building blocks, kitchen set, colouring pages – appropriate to their ages. Sometimes we organize special games for them. Be-fore Christmas it was cutting out figures from gingerbre-ad, during Italian evening – rolling out pizza dough.”

Fish lovers and slow food enthusiasts are happy to see a new addition to the menu called ‘Fresh Fish from Unie-ście’. The species of the fish

is not specified on purpo-se, as you never know what fishermen will come back from the sea with. Sebastian Zeger, the Chef, explains, “The Baltic Sea is not very rich with species, but some of them are worth noticing. Sometimes we serve sea bass, sometimes cod or sal-mon. I happens that we buy a pikeperch straight from the vessel, fish living both in Jamno Lake and inshore waters of Baltic Sea. Both pikeperch and rarely availa-ble turbot, are my favourite ones, good for cooking.”

And what if storm prevents fishermen from leaving the port, or frost will cover the lake with ice? “You may also count on fresh fish,” ensures Sebastian Zeger. “It may not come from Unieście, but it’s still imported as unfrozen. Quality of ingredients is the basis for satisfying our gu-ests. We pay a lot of attention to it, as well as to the right fish processing methods.”

The photograph presents one of the dishes served at Dune Restaurant Cafe Lounge – cod tenderloin. The meat is briefly fried in clarified butter, and then placed in an oven in a re-latively low temperature (about 54 degrees Celsius,

but this is not a sous-vide technique). Roasting gives the flavour and creates a crispy crust, explains Se-bastian Zeger. The dish is accompanied with mousse of fried tomatoes, grilled pak choi (a kind of oriental cabbage) pasted with miso, pepper mousse, marinated shallots, chive olive oil and a radish petal. It looks and tastes great!

The chef says: “We want the plate to always look lovely. Not each of them has to look the same. We indulge ourselves in some craziness in the artistic aspect of serving. But one is always the same: the dish must appeal with its appearance, because before we taste the food, we “eat with our eyes.”According to Sebastian Zeger, the restaurant menu has already begun to evolve to welcome the coming spring, so there will be more novelties: “The menu will change completely, it will be even a little crazy, because there will be surprising combinations, such as beet-coconut-aloe dessert. But I am sure that our guests will love them. I cannot reveal more. I invite you to see for yourself and check out the new attractions at Dune Restaurant Café Lounge.”

RESTAURANT CAFE LOUNGE

Dune Restaurant, Mielno, Pionierów 18,

For Reservation please call

501 870 858

The musicians : Remigiusz Błaszków and Przemysław Olszewski

”Fresh Fish from Unieście” : cod/ pak choi/ chorizo/ radish/ parsley

News from the Dune Restaurant Cafe Lounge The Dune Restaurant Café Lounge, which is located in the first building of the Dune Resort has made its guests accustomed to the exquisite cuisine and great atmosphere it offers. From time to time, new attractions appear. Recently ‘Fresh Fish from Unieście’ has been added to the menu, there is also live music every Friday and Kids Corner on Sundays. (Translated to English from the original version in Polish language)