What, besides COVID-19, is stopping housing investments?
Ten post dostępny jest także w języku: polski
A limited number of new investments are being introduced to the market and the residential offer is shrinking. Why are companies forced to suspend the debuts of subsequent projects? What obstacles do developers point to in introducing new investments? The survey was conducted by Dompress.pl real estate service.
Mirosław Kujawski, Member of the Management Board of Develia S.A.
Despite the unflagging interest on the part of buyers, the developers have problems with completing their offer. The reduced supply is not an effect of the developers withholding their offer, but simply a lack of it. For several years now, we have had a problem with land supply, which translates directly into fewer apartments. In addition, there are protracted procedures related to obtaining agreements and delays in obtaining building permits. Moreover, in Warsaw or Cracow, in 2019, less apartments were issued than a year before.
Zbigniew Juroszek, President of Atal
Above all, there is a need to improve the stability and predictability of the legal and economic policy environment. Polish law should not only be more transparent and unambiguous, but it must be created in a rational way, taking into account the interests of all participants in the Polish economy. From the point of view of a developer company it is also extremely important to reduce bureaucracy and simplify administrative procedures. This would certainly speed up the investment process.
Małgorzata Ostrowska, Member of the Management Board and Director of Marketing and Sales Division in J.W. Construction Holding S.A.
Administrative and legal barriers, i.e. the lengthening process of obtaining a building permit, are the biggest obstacle to the introduction of subsequent projects, which, as we know, affects all developers. For this reason, customers have a smaller offer. Last year J.W. Construction did not introduce many attractive investments in Warsaw, Gdańsk and Pruszków to the housing market due to time-consuming, additional arrangements.
Now there is a new uncertainty factor, in the form of the COVID-19 virus epidemic. It is impossible to predict what impact it will have on our offer and the offer of the whole development industry. As a stable company, achieving stable revenues over the years and having a wealthy land bank, we are prepared for various scenarios and will react flexibly to upcoming events.
Zuzanna Należyta, Sales Director at Eco Classic
The launch of new projects is hindered by the increase in construction costs, which reached an absurd level in early 2019. There are also problems with obtaining decisions and permits necessary to implement the investment. Difficulties with access to land do not seem to be such a problem, as many companies have long had sizeable land banks.
Monika Perekitko, Member of the Management Board of Matexi Poland
The supply aspect is most limited by two factors: significantly prolonged administrative proceedings for land already in the developers’ portfolio and difficult availability and high prices of investment plots.
Marcin Żurek, Director of Investment Implementation at Nickel Development
From our point of view, the biggest problem is the land supply. Unfortunately, the most attractive building plots within the city limits are practically exhausted. Those that remain are difficult or expensive. Therefore, their current market sales prices do not ensure proper investment profitability. Taking into account the recent increases in production costs, the implementation of new investments is much more challenging than before.
It should also be noted that a vast majority of developers use external financing, and at such costs as we are currently dealing with, it becomes extremely difficult to meet the requirements of banks as regards the parameters of the investment budget.
Wojciech Chotkowski, President of the Management Board of Aria Development
The biggest obstacles to the introduction of new projects are protracted administrative procedures, high prices and limited supply of land in good urban locations. In addition, we have recently seen a strong increase in construction costs, resulting from higher wages and material costs. There are also difficulties in finding reliable contractors. However, our company has experienced project managers and proven subcontractors and suppliers with whom we have worked since the beginning of our first investments.
Cezary Grzebalski, Director of Project Development at Skanska housing company
At Skanska we are currently seeing two main constraints, which contribute to the reduction of new investments. The first one is the reduced availability of land with regulated infrastructure and thus ready to start the project. The second is the lengthening of formal and legal processes, such as building permits, location decisions, land divisions, and access to the public road. The effect of such a situation may be a postponement of the commencement of the construction of the investment, and not necessarily its complete suspension.
Krzysztof Jabłoński, President of the company Iglica Nieruchomości
In fact, in the fourth quarter of 2019, in the six largest markets in Poland, the total sales of flats exceeded the new supply, so the available offer decreased compared to the end of 2018. At the end of last year, buyers were waiting for slightly over 50 thousand flats, the lion’s share of which was 92% under construction. In Wrocław, where we operate, the new supply exceeded the number of units sold in the last period of 2019. The developers operating here recorded a 12.5% increase in sales in the fourth quarter of last year and a 39.5% increase in the number of units launched for sale compared to the same period of 2018. This year, these results may be hampered by barriers, such as the decreasing supply of land and the extended time of obtaining building permits for subsequent stages of investments under construction.
Joanna Chojecka, Sales and Marketing Director of Robyg SA.
The residential market in Poland is still in an upward trend and we estimate that this trend will continue throughout 2020. There is still a shortage of about 2-3 million apartments in Poland. This means significant demand in the perspective of even 10-15 years. A noticeable trend in 2020 will still be investment demand and the appearance of new formats in offers. Our company also offered its clients an interesting investment option – Modern Space micro apartments, which enable, among others, VAT deduction.