Developers will not start new investments
Polish real estate market has prospered in the last couple of years, however, the global financial crisis has shaken the foundation on which the market stands. Investors find it hard to get financing, buyers find it hard to put down a hefty down payment and developers are trying to sell off what has been built. The situation doesn't look all bleak, according to panelists at the latest edition of the WBJ Business Breakfast, who believe that Poland's strong fundamentals have helped shield the sector from the shock felt in the United States or in Spain.
According to Jacek Bielecki, member of the board at the Association of Polish developers, Poland's real estate situation doesn't have to be desolate. He does admit that currently, developers are not going to start any new projects in order to avoid excess of supply like in Spain where there are more homes build than people to purchase them. "Until March of next year, developers will not start any construction," Bielecki said. "Last three years were so good that we can wait."
For Bielecki, the problem lies with the lack of support from the state to the developers and investors, in terms of tax breaks that would spur investment. There's no support for the buyers, either, he said.
The support for investors and developers, according to Przemysław Kastyak, attorney at law and construction law expert at Magnusson law firm, is in the works. He said that the government's working on plans to simplify the procedures for investors and developers to start construction. Currently, the regulations are halting potential investments, but Kastyak's doubtful how much the new regulations can help future projects. "It's in the early stages of discussion and it is difficult to predict what direction it will go," he said. "We are expecting revolutionary changes in the investment laws."
Investors have been halting projects due to fear of receiving bank credits to finance new developments and of potential buyers also having difficulty receiving a mortgage. Meanwhile, there's a healthy and balanced real estate sector in this time of turmoil. According to Grzegorz Trawiński, head of Poland's Eurohype AG office, the office sector has seen constant demand.
There are record lows of office space available, said Trawiński who added that this year 326,000 sqm of office space will be leased, which is good considering that developers aren't negotiating new office building construction deals.
When can Polish real estate market expect to be overturned? According to the panelists, the situation is not expected to change in 2009 as developers and investors are deciding to play the waiting game.
