Do developers plan to build on municipal land?

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Will housing estates be built on communal land as part of cooperation based on the new provisions on the settlement of premises or buildings in the price of real estate disposed of from the communal real estate stock, the so-called premises-for-land law? How do developers assess the possibility of implementing projects under the new programme? Are communal lands interesting for them? The poll was conducted by the real estate website dompress.pl.

Andrzej Oślizło, President of Develia S.A.

There is no denying that one of the biggest problems faced by developers at present is the acquisition of attractive plots for new residential investments. We welcome any solution that increases the supply of land, even if in fact the aim of this programme is to shift the statutory obligation to build social and communal housing, which should be carried out by local government units, onto developers. However, for the time being it is difficult to say whether the “housing for land” programme will enjoy popularity. Certainly, a big incentive will be the fact that the properties offered by communes must be covered by a local zoning plan or a decision on development conditions. This will significantly speed up the investment process. However, we have some concerns as to whether customers will be interested in buying flats in buildings that will house social housing. However, we will keep a close eye on the operation of this scheme. We remain always ready to talk to the authorities of municipalities in the areas where we carry out housing investments.

Mateusz Bromboszcz, Vice-President of the Management Board for Legal and Administrative Affairs at Atal

Given the dwindling supply of available land and the fact that the purchase of attractive plots of land is currently one of the greatest difficulties faced by developers, the act on the acquisition of communal properties, the so-called ‘flat-for-land’ regulations seems both right and necessary.

We are open to dialogue with municipalities and interested in participating in such projects. What is key, however, are the details of cooperation and how the entire programme will function in practice at the local level in individual municipalities. This is what will determine whether the opportunity provided by the act will become a real tool for acquiring premises for communal resources and land for developers for their basic activity. Or will it be just another act of marginal use in practice.

Zuzanna Należyta, Commercial Director at Eco Classic

From our observations it seems that the interest in this solution is marginal.

Adrian Potoczek, Sales and Marketing Director at Wawel Service

We see potential in the programme, but the complexity of the procedures and ambiguous investment conditions do not allow us to take full advantage of the programme. Often the plots are located in very attractive locations in communes and are in the interest of developers. However, municipalities are not very eager to hand them over to developers. If the land is released from the municipalities, it will help the sector to regain its investment potential. The key issue, however, is what kind of offer the local governments will prepare for investors. Above all, these must be plots located in the centre of cities, well connected and not requiring large expenditures on infrastructure. Only such conditions will bring success to the programme.

Janusz Miller, Sales and Marketing Director of Home Invest

We forecast a rather small interest in the programme on the part of developers. The cooperation between municipalities and developers will certainly not be the easiest one. On the other hand, the sale of flats in this type of projects may be difficult.

Małgorzata Ostrowska, Director of Marketing and Sales Division in J.W. Construction Holding S.A. 

The basic cooperation model provides that the investor may construct a residential building on the land acquired from the commune or renovate an existing building. I believe that there may be a lot of interest in the programme due to the fact that one of the biggest problems of housing construction is the limited number of suitable grounds. In particular, it is becoming increasingly difficult to find land in better locations. Many developers, in order to purchase them, have in recent years accepted more expensive and complex solutions, even such as revitalization of industrial areas. This situation adversely affects the price of land in premium locations and, consequently, the price of investments. The Act on accounting for the price of premises or buildings in the price of real estate disposed of from the communal real estate resource may change this situation, provided, however, that communes launch resources in such locations or at least where the needs of the local community are high.

Mariola Żak, Sales and Marketing Director of Aurec Home

I believe that the Act has a great potential, but everything depends on the offer prepared by local governments for investors. If it is attractive, developers will certainly be very interested. Of great importance for the attractiveness of the land is its location and, consequently, good communication with other parts of the city. The success of the programme also depends on how willing the communes will be to put up properties meeting the tender requirements. “Lokal za grunt” may help to noticeably improve the housing situation of Poles who cannot afford to buy a flat for cash or credit.

Tomasz Czubak, Director of Development Project Preparation at Jakon

Interest in this programme on the part of developers will certainly be high. However, we fear that the interest of the municipalities themselves will not be so high. Local governments own real estate which is interesting for developers, but they are holding back from developing it. Cooperation between developers and municipalities is certainly possible, but in order for this to happen, clear rules of cooperation must be drawn up.

Wojciech Chotkowski, President of the Management Board of Aria Development

It was only on 1 April this year that the provisions of the Act on settlement of the price of premises or buildings in the price of real estate sold from the communal real estate resources came into force, which introduced the so-called premises-for-land option. Too little time has passed, therefore, to be able to assess the Act, how it works in practice. An objection to the Act has been raised by the Polish Association of Property Developers, of which we are a member. There are concerns about the replacement metre price, that it may turn out to be lower than the market price. In that case, acquiring land in exchange for handing over a pool of flats to an investor may not necessarily be profitable. We will be watching this closely, as it is currently becoming increasingly difficult to find land for investments at a reasonable price.

Andrzej Gutowski, Vice-President of Ronson Development

Limited access to attractive land in the largest agglomerations makes all projects of this kind very highly valued by our industry. From the point of view of the assumptions themselves, such a project has therefore a chance to succeed. Developers are familiar with the approach to such topics from transactions on the commercial market, for example, with private property owners. In such situations, part of the transaction price is settled in the form of flats or commercial premises. For us, this is obviously a very good solution. However, the question remains whether and to what extent local governments will be willing to cooperate in this way, as developers are. Therefore, we will check the details of these regulations with great interest.

Sebastian Barandziak, President of the Management Board of Dekpol Deweloper

In the era when the stock of attractive land for residential development is still shrinking, we believe that this act can be a great support for developers, as it makes it possible, in a way, to ‘release’ land, often very attractively located, which so far has been impossible to obtain. However, the issue of conditions to be met by the planned property and the type of land to be made available by the municipality remains to be verified here. The interest and willingness of developers to take advantage of such a possibility will mainly depend on that.

Author: dompress.pl