Following a Champagne toast, Ehud Kanfi presents his guests with bottles of wine from the finest vintner in Israel and tells them that after lunch is served, they can treat themselves to a full-body massage.

The guests are reporters and Kanfi is plying them at a recent coming-out party for Neocity Group, an Israeli developer that has built more than 10,000 flats in Israel and Eastern Europe over the past 10 years. The company has plans to build more than 6,000 apartments in the Czech Republic and Slovakia this decade.

Kanfi characterizes his opulent display to the press as indicative of the treatment Neocity clients will get once the full-scale developer completes flats in the new year.

"The new generation will have a focus on the client," says Kanfi. Officially, he is a Neocity consultant, but he is also its de facto director in the Czech Republic.

And if there is one thing he is not, it's timid.

"Our intention at the end of the day is to make money, and we're not ashamed of it," he says. "There is not a contradiction between service and profit."

The company has the backing of three Israeli companies, including the country's leading gas company, Petrolgas. Neocity has already purchased 25 million euros ($30.3 million/726 million Kč) worth of land in the Czech Republic alone.

Business exodus

In the 1990s, Neocity Group was a force in Israel. But the real estate landscape in its home country soon changed.

The building boom that came with the 1993 Palestinian-Israeli Peace Accords faded late in the decade. A few years later, so did hopes for lasting peace, with the second Palestinian intifada in 2000.

With domestic investment looking less attractive as the conflict continued, companies that could afford to invest internationally began looking for new, more welcoming territory. Neocity developed in Canada before focusing on Eastern Europe, the nearest friendly market.

The company's projects in the Czech Republic are funded through a real estate fund that comprises private investors unknown even to Kanfi.

Many real estate funds grew after the attacks of Sept. 11, 2001, when the United States cut its return on treasury bonds and lowered interest rates to the point where many investors began looking for other opportunities that would ensure a larger return. As a result, many such funds only buy existing assets rather than acting as a full-scale developer, as Neocity does.

Backed by the largest bank in Israel, Poalim Capital Markets, Neocity went on the road, pitching its plan to private investors with a one-year goal of building projects worth 50 million euros. Two months later, with the fund swelling to twice that amount, Neocity had to close entry before it became too unwieldy.

The fund gives the company a tremendous amount of flexibility, Kanfi says. "Now, if we see land we like, we can transfer the money immediately."

Meeting new demand

When the real estate market took off in the Czech Republic, Kanfi says, the growth was too sudden to factor in quality.

"We have seen a boom in the Czech market, and in Prague especially, but the trend was on development with low quality," he says. "I've seen developments in Prague 5 and Prague 6 that were among the most beautiful in the world that now look like wounds on the skin of the city."

Kanfi's view is that the Czech market is "not saturated — it's condensed." He is confident that those earlier rushed developments will lose out to quality in the end. And he sees a great untapped need emerging throughout the former Soviet republics — service.

"People were educated not to ask for more," he says. "And because of years of lack of supply, many developers ignored their professional dignity. Now clients are demanding higher quality and a better product. It's our intention to answer this demand."

Every Neocity flat will have network computing access and floor heating as standard features. Kanfi negotiated with Czech banks to provide a two-year grace period on mortgage payments, and promised constant contact with its manager — Neocity Group.