Project Falenty Real Estate Investment Project – Falenty, Poland Falenty PROJECT LOCATION – high level view MAZOWIECKIE VOIVODESHIP Pruszkowski county RASZYN commune Falenty PROJECT LOCATION – warsaw perspective Western main City center Railway station district Major business district Main Warsaw Airport Project location Major shopping Nature Warsaw city Center reserve border Falenty Project location – local perspective Raszynskie PONDS Nature reserve A beautiful and picturesque ornithological reserve constituting a rich ecosystem for water and marsh birds with 11 ponds. One of only 5 reserves in mazowieckie voivodship that protects nature related to the functioning of fish ponds. Janki shopping center One of the major shopping centers in Poland with 94 000 sq m of usable area and over 170 shops and stores. Other Orhol & Olsen Projects Orhol & Olsen is currently investing in construction of 12 houses in semi detached form on two lots located in Falenty Duze. Project cost estimated at 6,8 M PLN total. Route 665 Krakowska ALLEY PROJECT LOCATION Former provincial road Main street of the Warsaw 9011 sq m of land located in Falenty Duze leading to Expressway S8 that district of Wlochy, 25 minute – a village in the administrative district of connects agglomerations of: drive direct route to city Gmina Raszyn. Wroclaw, Lodz, Warsaw and center. Bialystok. PROJECT CONSTRUCTION PLANS Local spatial development regulations Although there is no approved urban development plan by local authorities for this lot, there are certain limitations in this zone. Key limiting regulations are: • Building coverage allowance of total lot area – 26% • Maximum building hight – 9,5m • Parking space requirement – 2 spaces per household • Maxium building width (Źrodlana roadside) – 10m • Angle of roof slopes – 10-45 deg. • Distance from Zrodlana road – 8m Proposed development solution Our proposal is based on verified construction solution currently being developed in our ongoing project in Falenty. We recommend best value solution focused on constructing 26 semi-detached houses, 133 sq.m. per house including garage, two-storey building, each house with 164-290 sq.m. of garden area. BUILDING SUMMARY FLOOR PLAN SUMMARY GROUND FLOOR USABLE AREA: NR ROOM NAME AREA (sq.m.) 0.01 VESTIBULE 3,91 0.02 TOILET 1,73 0.03 STAIRCASE 4,05 0.04 KITCHEN 7,71 0.05 LIVING ROOM + DINING 24,9 0.06 OFFICE 12.82 GROUND FLOOR USABLE AREA 55,12 GROUND FLOOR FACILITIES AREA: NR ROOM NAME AREA (sq.m.) 0.06 BOILER ROOM 3,42 0.07 GARAGE 15,50 GROUND FLOOR FACILITIES AREA 18,92 NET TOTAL AREA GROUND FLOOR 74,04 FIRST FLOOR USABLE AREA: NR ROOM NAME AREA (sq.m.) 1.01 STAIRCASE 3,81 1.02 BEDROOM 11,78 1.03 BEDROOM 11,41 1.04 CLOAKROOM 5,96 1.05 MASTER BEDROOM 10,47 1.06 BATHROOM 5,15 1.07 BATHROOM 5,80 1.08 CORRIDOR 4,89 FIRST FLOOR USABLE AREA 59,00 TOTAL FACILITIES AREA 18,92 TOTAL USABLE AREA 114,12 NET TOTAL AREA 133,04 BUILDING VISUALS Project timeline STAGE 1 STAGE 2 STAGE 3 STAGE 4 3 – 6 months 6 -9 months 9 -12 months 3 months ● Investment contract ● Project adaptation and ● Construction finalization ● Investment payout to conclusion construction approvals investor ● Sales finalization ● SPV establishment ● Construction contract ● SPV liquidation ● Release of fixed assets to conclusion ● Capital allocation and respective house buyers transfer ● Commencement of construction ● Land acquisition and title transfer ● Marketing and sales Market overview GDP GROWTH FORECAST MAJOR PRIMARY MARKETS OFFER PRICES FLATS SOLD ANNUALLY VS. OFFER AT THE QUARTER-END 4,5% 3,6% 3,5% 3,3% 3,1% 2019 2020 2021 2022 -3,6% Pre-Covid Forecast Current Forecast Source: European Commission, Economic Forecast for Poland Source: EY, PolishReal EstateGuide 2020 Source: JLL, Q3 2020 The Polish economy is one of the most The Polish residential market is the largest in Central and The number of units launched for sale in Q3 was similar to the results achieved in the first two sustainable ones within the EU with positive mid- Eastern Europe, however it still lags behind Western EU in quarters of 2020 and amounted to slightly over 4,000 units. Compared to several previous years, term outlook. Poland was the only country within terms of ownership structure (with a predominant share of the number of new units was reduced, which was directly related to the restrictions introduced in the EU to avoid recession over 2008-2010 and owner occupied housing stock), age of housing stock and response to the COVID-19 pandemic. In the last three months, 63% more units were sold than in has been outpacing EU-average GDP growth for level of market saturation. However, last 5 years many years. particularly year 2019, showed that Poland is on track for Q2 2020. A similar quarterly sales volume of 4,500 units was registered in 2015. The offer volume catching up with more developed western markets. in Warsaw remained at a relatively low level of approx. 15,000 units, which translated into an Globally, the COVID-19 pandemic will result in offer that was 25% smaller than in the boom period. Units in the most expensive price range economic regression – which is also the case for At the end of Q1 2020 for the first time the average offer above PLN 15,000/m² became a large portion of the total number of units Poland. GDP is projected to decline in 2020 by price of flats available in Warsaw exceeded the level of on offer (9.9%) about 3,6% due to a disruption in economic PLN 11,000/sq m. Demand reduction and downward activity caused by the lockdown measures and an pressure on the prices will depend directly on the duration Increased interest in the living sector can be observed in Poland. Prime multifamily yields stand unprecedented fall in external demand. In 2021, of the epidemic. Offer prices remain stable or even might GDP should bounce back by 3,5% driven by a statistically rise but the sales period will be extended. at 5.25% for single assets in forward funding deals in central Warsaw, while sub-central Warsaw strong recovery in household consumption. are discussed around 5.5%. REAL ESTATE DEMAND – COMPARISON H1 2020 vs. H1 2019 150% Market overview 128,2% 110,1% 100% HOUSE DEMAND STRUCTURE Q2 2020 52,0% 48,9% 50% 31,6% 60,00% 21,1% 48,8% 9,1%11,1% 10,3%11,5% 40,00% 0% 32,4% Jan Feb Mar Apr May Jun -10,4% -13,0% -17,3% -15,1% 20,00% 15,9% -21,8% -24,0% -25,1% -50% 6,9% -38,0%-33,5% -33,4% -38,4% -33,5% -49,8% 0,00% -56,7% <100 sq.m 101-200 sq.m 201-300 sq.m >300 sq.m -100% Source: Morizon.p, Rynek nieruchomości w I półroczu 2020 Apts for sale Houses for sale Lots for sale Apts for rent The outbreak of the coronavirus epidemic and the resulting restrictions on movement or the use Source: Morizon.p, Rynek nieruchomości w I półroczu 2020 of parks and forests significantly influenced the perception of the benefits of having a house and It was an exceptional six-month period for the Polish real estate market, The economic development that has been going even a piece of your own lawn. The possibility of unhampered going outside, playing with on for years, the progressive increase in the wealth of citizens and the undisturbed prospect of further growth in prosperity children in your own sandbox or meeting friends at the grill near the house became a priority meant that no one - except perhaps the born pessimists - expected significant changes on the market. overnight for those looking for their own place. High demand for real estate - both those intended for living needs and those purchased for investment purposes - could In a recent survey performer by a leading real estate agency – Metrohouse, 40.2 percent hardly be satisfied by the supply and prices were systematically rising. Metrohouse agents admit that customers are changing the search for a flat into segments and houses, and at the same time 35.4 percent. agree that instead of buying a flat, the interest in This was the case until the beginning of March, when the Covid-19 virus appeared in Poland. The fear of the coronavirus buying a plot and building a house is increasing. There is a visible trend of looking for real estate and the measures taken to prevent its spread have hit many sectors of the economy, leaving a clear mark on the real where you can enjoy your own "piece of land" in the event of a possible quarantine. estate market mainly due to lockdown and severe restrictions in mobility. This lockdown, although critical in slowing down Given the shift in buyers preference from apartments to houses, the matter of affordability is of the industry, has also affected the preferences of potential real estate buyers. also key in understanding the size preference of new houses. Majority of houses sold are within close range from 100 sq.m. With high prices of land and buildings within city centers – potential For this reason, many clients who have so far considered buying a flat have turned their interest towards offers for the sale buyers seek more affordable solutions further away. With today average prices of new of houses (and construction plots). This is confirmed by the statistics of demand for this type of real estate, which, although apartments within the city borders starting from 12,000 pln (Warsaw), a potential buyer can systematically growing for a long time, in May and June were higher than the year before by 31.6% and 21.1%, respectively.