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International Property News



Three left in pursuit of Rohansk ostrov


5th May 2008

Pragues City Council launched the second round of a tender looking for a developer to buy lots on Rohansk ostrov in Prague 8. Councilmen hope to get up to Kc 4 billion ( 158.45 million) from the sale of this land, which six years ago was inundated by a flood. Only three serious bidders have remained from the original 17. A victor should be known by the end of June.

The city wants Rohansk ostrov (Rohan Island) to become a housing and leisure-activities area. Anti-flood barriers have already been installed and the City Council approved necessary changes in the zoning plan, designed to helptogether with finishing infrastructureto transform the island.

Finishing Pobren street, which will improve serviceability of the area, is vital for its further development, said Pavel Klega, Pragues mayor deputy for economic policy.

We are building brand new backbone infrastructure able to cope with future strain in this area, corresponding with its rate of development.

Last year, this part of the city alone took Kc 90 million of investments. By the middle of 2008, all works could be finished there. But even so, preparations on Rohansk ostrov should cost some Kc 80 million more yet. It will be spent to destroy the iron and concrete skeletons of deserted buildings. In the devastated terrain, we will restore an arm of the river, approximately where it was until the 19th century, when they filled it up. A new Rohansk ostrov will thus emerge, connecting the pieces of land in the north. In the southern part, there will be green areas established with network of pathways for walking, Klega explains. The 2008 city budget allocated Kc 5 million for landscaping at Rohansk ostrov. In a further phase of construction, where the upper and lower branches of the Vltava river meet, an accessible area with a water cascade will be created. The northern part of the island will have marinas and be used for recreation and sports. There is also a study with a draft of an amphitheater in which the stage is built on the water. In the south end, the city plans propose green areas with pathways and an observatory tower, serving also as a lighthouse.

The second round

Currently, the second round of a developers selection is in progress. Three firms remain in the gameKonsorcium Rohan, owned by Sekyra Group; Development Pobren, a property of the financial group J&T; and real estate firm Avenzo Vice, created in 2006 and whose majority owner is Ballymore Properties. These firms will now compete for some 200,000 square meters of land. It is the largest investment opportunity so far offered by the city in an open competition. Those who offer the best price should win. The final decision on a winner is expected in the end of June. In the first round, bidders were to make a deposit of Kc 3 million. But in the second round they are asked for a principal of Kc 100 million.

The tender has been running since the beginning of 2007. But it is not simple and the proceedings have been scandalized, as the three most successful firms were pre-selected by law firm Jansta, Kostka. Former Prague Mayor Jan Kasal sees such procedure as uncommon, to say the least. But the incumbent mayors deputy, Markta Reedov, defends the Councils committee. Jansta may propose a victor, but the final decision stays with the committee, Reedov said.

Nevertheless, the real problem was elsewhere. The committee was to obtain from Jansta complete materials, but in fact evaluated offers by all firms were lacking. The committee has never got all offersand I do not want to decide this way. I have never seen a committee allowing a law firm to anticipate its decisions, said then-opposition deputy Miroslav Poche. So three firms, about which speculation was circulated last year as possible victors, have passed the second round. But now the rules of the game have changed. Eighty percent of evaluation as a whole is based on the price, 10 percent on a schedule of work and 10 percent is on the table of fines for failing to observing fixed deadlines, Klega said.

But not all members of the committee agree with this arrangement. For example, Poche would prefer to base the decision strictly on submitted prices. According to a Prague price map of lots in this area, 1 sqm starts at Kc 22,000. The city could therefore get some Kc 4.5 billion for its property. In any case, City Hall will have to subtract preliminary investments on the island from the paymentKc 500 billion for a new road in Pobren street and Kc 500 billion for buying the lots.

Greens are against it

The municipal governments plans incited turmoil mostly in the Greens (SZ). The area lies in a flood zone, and therefore it is not suitable for housing, said rka Drahordov, the president of the SZ in Prague 8.

However, the island is protected against a catastrophic flood, like the one the country experienced in 2002, by newly constructed barriers. Most lots offered for sale lie in protected parts of the island.

Other problems concern potential risk that such a building project will bring an increased traffic burden in this part of the cityoverstrained as it is now. Some people say that in this vicinity, the island is one of a few areas not completely built over and could be used differently. Greens would like to see a park here, combined with tracks for skaters, or an artificial climbing wall. The present zoning plan and all the projects in preparation look fine, but I am afraid that the winning developer will push through changes that will be against the interest of Prague 8 residents, said Petr Vilgus, a Green Party councilman from Prague 8 Council. I am afraid that politicians and lobbyists might win over experts at Rohansk ostrov, he added.

In this case, the experts view is the same as that of Vilgus. From the environmentalist point of view, the traffic burden is the most dangerous threat here, said Martin Brani of the Institute for Environmentalist Studies of the Faculty of Sciences at Charles University. If the entries and exits are rationally and efficiently regulated and there are no towering buildings, Rohansk ostrov may become a pleasant part of the Karln neighborhood. Brani warned mainly against supermarkets or stores being erected in the area, which would bring an enormous traffic strain.

On the other hand, Martin Skalsk from environmental protection group Arnika Association is backing the building plans. He believes new apartments downtown are desirable. But it is important to really make a neighborhood for living there, not a new office-stricken area, as happened in Budejovick or Pankrc [Prague 4], Skalsk said. The key question is whether the selected developer is given clear-cut rules, allowing City Hall to have its say in the development.

He warns that this very often is not the case and new buildings are erected without any urban concept, contributing very little to the well-being of the city dwellers. It is questionable whether the construction will be well-planned, in view of possible risk of floods, but restoring the Vltavas arm is probably a sensible idea, Skalsk added.

Goals of the city

The city is clear about what it wants to have instead of the devastated Rohansk ostrov. The present concept is to have housing, offices and leisure areas there. There is to be a new park as large as Stromovka in Prague 7. By restoring the old Vltava arm, the Rohan and Manin islands will emerge, Klega said.

In its effort to prevent any high-handedness on the part of developers, the city marked lots on its plan in writing, so as to make clear to which purpose the lot in question is designated. This means that the developers, although they will pay for the land, are not be allowed to build there at their will. I believe sincerely that investors will most of all be interested in building interesting housing projects here, Klega said. There should be also a swimming stadium on one of the lots, which is desperately lacking in Prague; it might even become an Olympic venue in future, we will see.

Radek Polk, spokesman of Sekyra Group, described the plans of his employer. In cooperation with Arcadis Project Mangement, we prepared a project of a new neighborhood called Zelen ostrov (Green Island). The project is based on energy savings and accentuated protection of the environment. Life is going to come back to the center of the city on the Vltava. And not only thanks to a new housing construction site. There is to be also a new leisure zone with islands full of green. One of them is even to become a nature reserve just a few minutes from downtown.

Others are also optimistic about the revitalization. Developers work should improve living conditions in Karln because there will be many new green areas and new shops. Also, the value of the local properties will be pushed uptheir owners will get rich, said Ludek Hoznauer, a councilman from Prague 8 Council.

Safety first

Those parts of Rohansk ostrov offered for sale are safe because their protection against flooding has been finished. Anti-flood measures in Karln cost Kc 650 million. All remains of waste dumps were cleaned up and no ecological burden from past has been left. Landscaping cost Kc 182 million; part of which was paid for by European Union funds. Areas that cannot be protected against flooding will be converted into leisure zones with a cycling track, and partially they will give way to the restored arm of the river. The arm existed in the past, but it was filled in and the two islandsRohansk and Maninskgot connected, forming one body. In the new shape of the area, these two islands will be reborn. Recreation space will cover altogether 60 hectares.

Rohansk ostrov, like Karln, was stricken by the flood in August 2002. But Karln ironically profited from the catastrophethe city invested heavily in the neighborhood and new plans for Rohansk ostrov resulted from these efforts. Today, Karln is a desirable place for firms in Prague.

Who is to build?

The investment company J&T is one of the biggest investment groups in the Czech Republic. Besides its development activities, the company runs a bank, owns Sparta Praha football club and a private plane rental company ABC Jets. It plans to invest in at least Kc 30 billion in a Czech venture. Using this money, it wants renovate Holeovice in Prague 7, Rohansk ostrov and other areas in Karln, as well as brownfield at the former arms factory Zbrojovka Brno, in South Moravia.

In Karln, J&T intends to rebuild grounds of former Prask strojrny (Prague Machinery Works) factory in an administrative-commercial complex called Rustonka, and to build apartments there. Construction should begin next year and is scheduled to be finished by 2011.

Sekyra Group is focused mostly on real estate and development. Currently, it is developing and administrating projects covering an area of 500,000 sqm. The group builds an average of 1,000 new apartments every year.

Not much is known about Avenzo Vice. It has an address in Karln but nothing else, not even a Web site, and has no completed project visible behind them. But Ballymore Properties is an international developer, focusing on finance and construction of large multifunctional buildings and complexes in downtowns across the Continent. They have a portfolio of projects exceeding 7.7 billion (Kc 248.75 billion), and at the same time they are expanding to markets in Central and Eastern Europe. Their Czech branch was opened in 2001.

Rohansk ostrov

The island emerged in 1550 at an old river deposit, connecting several small islands in the river. These were together called together Velk Bentky (Great Venice). At its largest, the island reached from Tenov to todays aldova Street. Around 1900, its western end was connected to Jeruzalmsk ostrov. During large stream regulation at Maniny, Rohansk ostrov was connected to Libensk ostrov, both of them reaching from Karlns bank to Maniny. Roughly in place of todays Rohansk embankment there was a river arm running between Karln and Rohansk ostrov.

The island got its name from its 19th century owner, Josef Rohan. In that era, the island served mostly as a promenade. The islandand Karln as a wholewere struck by a flood in 1890. Torn-off rafts crashed into a bridge as soldiers were trying to dismantle it at the last moment and 30 of them died. Their deaths are commemorated by a small monument in front of Invalidovna. The area also suffered damage in August 2002 floods.

In the beginning of 20th century, the island served as a background for local industries. Now, the idyllic times of the 19th century are coming back. There is already a new golf club as a good basis for a recreation zone.

Source: CBW
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