GE Real Estate takes a slice of Ronson

GE Real Estate CEE has acquired a 20.9-percent equity interest in Ronson Development Group. The value of this transaction amounted to EUR 25 (zł.95) million. The remaining shares in Ronson are owned by Israeli Theaters and U.Dori, with both companies holding 39.55 percent each.

Ronson Development has been present on Poland's market since 2000 and so far was connected mainly with Warsaw's residential market, where it has sold 1,000 apartments. "The fact that GE has decided for Ronson Development to be their residential arm in Poland is proof of our credibility and proof that we have been realizing the right development strategy," said Dror Kerem, general director of Ronson Development.

For GE Real Estate CEE, investing in a development company means entering a new construction market sector. For the first seven years of GE's investment in CEE, the company was only focused on investing in retail, warehouse/logistics and office-building projects, and the residential sector was the only market the company had not touched. According to Karim Habra, GE Real Estate's managing director for CEE, the company's first residential project was begun in 2005 in Prague, when the firm teamed up with Orco Group.

"The residential developers market is very fragmented, therefore we have decided not to invest in particular projects, but invest at the company level," said Habra.

Habra said that this was the reason that GE Real Estate decided to purchase a more than 20-percent stake in Ronson Development, adding that its strategy towards Ronson will help the company's further development. At the beginning, it will result in extending Ronson's operations outside of the Warsaw market.

"We are going to announce nine new projects in 2007," said Kerem. "Four of them will be located in Poznań and Wrocław and five in the Warsaw area."

Kerem added that in 2007, 600 apartments will be sold and the company already owns more than a dozen plots that are ready for other developments.

Representatives of both companies agree that, despite the consolidation process of GE Real Estate and Ronson, the Polish market is a good place for large and small investors to focus on a small number of projects. However, Kerem says it is not a critical issue for development companies: "You can only gain a bigger company and access to more land."

Habra added that the consolidation process has been and will continue to be a factor in the various construction-market sectors, such as office, logistics and retail, but the residential-development market will remain fragmented.