Medsea in € 120million spanish property development deal

Medsea Estates Group PLC, the leading Spanish-based estate agency, has just signed a four year contract with Residencial Argos Sol, S.I to market all the properties on a new €120million development in Murcia, Spain. AIM-listed Medsea, which also owns ten percent of the developer, has sole selling rights for all units, whose prices start at €99,000 and go up to €229,000 for the luxury villas. Over the period of the contract the consortium believe they will generate €35 million of profits of which approximately 10% will accrue to Medsea.

Medsea’s management also believe that in addition to the development income net sales commission of circa €12 million will be made by Medsea over the period of the contract.

The Residencial Argos Sol development, in the lakeside area of Cehegin, covers 325.083 sq m and comprises 830 units – ranging from apartments, town-houses, semi-detached villas and an aparthotel/spa.

Cehegin is approximately 62km from the City of Murcia and linked directly to it by a new motorway. The international airports of Alicante and Murcia are just over an hour’s drive away, as are a choice of beaches. As well as its large lake (venue for the National Fishing Championship), the area is renowned for its health-giving hot springs.

Medsea also made in an investment of 785.000€ ( which equates to a holding of 13% in the development company holding the land and project) in the Frondoso Valley in June 2004 at an initial land valuation of €24 million . After a recent revaluation by Tinsa, the Spanish chartered surveyors, based on a revision of planning consents allowing the developer to build 1066 houses the Land has been re valued at €55 million.

Says Medsea’s Chairman Tony Gatehouse: ‘The Argos Sol project is a major breakthrough for us, producing profits from two sources. As well as the estimated €3.5 million profit we will make from our financial partnership with the developer, we also anticipate generating a further €24 million through sales commissions which translates to €12 million additional profit to Medsea after paying agency commission over the next four years. This is excellent in terms of Medsea’s short to medium term prospects. We are also in early stage acquisition talks with a number of targets. Potentially this will open up Cyprus, Turkey, Dubai, Bulgaria, Portugal and South America, which will make Medsea much less reliant on its current activities which focus on Spain and Italy.

‘Concurrent with this, we have also had our Fondoso Valley investment revalued. In June 2004 we invested €785,000 at an initial valuation of €24 million. The recent revaluation, based on revised planning consents allowing the developer to build 1066 houses, now values it at €55 million. This puts Medsea in a very healthy situation indeed.

‘Argos Sol reflects the increasing demand we are finding from UK clients for properties away from the traditional beach resorts. Cehigin is about 600 m above sea level and has a dry mountainous climate, compared to the humidity found along the coast. It is an old town with a population of 14,000, and comprises a mix of medieval houses, churches and glorious architecture. It is surrounded by valleys, mountains, reservoirs, forests and wildlife, yet with two international airports only an hour away.

‘The hot springs of nearby Archena already attract regular visitors and the developer is in the process of building a luxury health spa with a clinic to cater for them. Cehegin is an unspoiled area that is ideal both for residential property and holiday homes.’

source Medsea Group