Building Consensus

However, he faces a tough task in simplifying building legislation, increasing the amount of spatial-development plans and halting the flow of Polish builders to foreign shores.

Just over a week ago, Prime Minister Jarosław Kaczyński appointed a new Minister of Construction in the shape of Self-defense Deputy Andrzej Aumiller. The new Minister has already announced plans that could improve Poland's residential sector and relieve the political and economic pressure to increase the number of new flats available to Poles, not to mention help the ruling Law and Justice meet its election promise of three million new flats by 2008.

For the last six months, the Minister has worked for Echo Investment, a major development company. "In Poland, development companies provide the market with most flats, so the corporate experience of the new Minister in Echo Investment is something valuable, because it could help him identify the sector's most urgent problems," says Artur Pietraszewski from Reas Consulting.

Investor friendly

The new Minister intends to refresh the law on spatial development, which should mean more spatial-development plans for gminas, lowering the prices of plots and clarifying a timetable for the permits needed to begin investments and construction works.

This should satisfy some developers, who say the most urgent problem in the industry is a lack of clarification on these issues. "The first thing needed is to make all the procedures easier," says Marcin Górzyński from development and investment company Aquila Park. "The building law has been changing for many years, but the fact is that this law does not really concern issues connected to investment and developing projects. The construction industry is influenced by all kinds of legal regulations that concern the environment, spatial development, infrastructure and economic freedom."

Górzyński says the law should be designed to help developers so their construction works could be completed as quickly as possible. He says what is most important is to limit the time needed to gain all necessary permits that have to be obtained from the authorities.

In the past corruption was the main problem, but this is no longer the case. Now, unclear laws mean officials are unwilling or unable to make binding decisions. "Administration officers are scared of making any decision as the law is unclear and most of their decisions can be appealed," says Górzyński. "On the other hand, decision makers, even if all the necessary criteria are met by a developer's company, are not always in a hurry to grant permits, because if the permission is granted too quickly they are afraid of being accused of accepting bribes."

Governmental help

"The country has to support the construction industry. Without this we won't be able to provide enough flats," Andrzej Aumiller told PAP. The government may have appeared eager to help the industry during its election campaign, but that enthusiasm appears to have dimmed. The industry points to Spain as a good example, where the government has given its support to the construction sector for both social and private housing.

"After Spain's EU accession, construction law in the country was changed and its government developed 75,000 social-housing apartments and helped homeowners pay off their mortgages," says Edmund Kubeczka, director of the construction-sector department in ING Bank. "In Poland so far, everybody has been only talking about the government's solution, but no one has really put this work into action."

Kubeczka says that some declarations have little to do with reality because it is impossible to build, for example, 350,000 to 400,000 flats every year if currently only 100,000 to 150,000 are completed. "It is possible to increase the number of completed flat developments by 10 or 20 percent, but not more," says Kubeczka.

He says that it is impossible for the government to complete three million flats in the near future, regardless of which new laws are introduced.

European funding

Minister Aumiller announced that he would use EU funds to build more flats. "As far as I know, there is no EU program that is focused on the development of residential real estate," says Reas' Artur Pietraszewski. "However, EU grants for infrastructure development could be used as this is one of the crucial issues to be solved when developing residential projects."

Pietraszewski says that the lack of spatial plans is not the only problem for developers, as the dearth of infrastructure hinders the construction process on projects. "Hopefully the plans of the Ministry of Construction will correlate with those that have already been announced by the Ministry of Infrastructure," he adds.

Kubeczka says that most EU funding is used for developing and constructing environmentally friendly infrastructure, such as water treatment plants and transport infrastructure, which helps gain new investors for local areas. Funding for homes could be far down the list of priorities.

Another problem that is faced by most development companies is a lack of staff as many construction workers are choosing to work abroad and a shortage of builders is increasing the costs of developing projects. Putting up salaries appears the only solution for finding staff. Some employers want to open the labor market, which would include not only the citizens of the EU's newcomers Bulgaria and Romania, but also Ukrainian workers.

Kubeczka said that only a significant increase in wages of 30 to 50 percent could stop the flow of Poland's construction workers, as even Ukrainians are often choosing to work in Russia, where worker demand is so significant that a monthly salary can amount to up to $1,200 (zł.3,596).