Housing authority
Jarosław Szanajca: Yes and no. We can speak of a well-developed residential market in Poland when it comes to the standard of the products that can be bought on it. We have a market that offers homes and apartments of a quality that can only be dreamt of in most Western markets. [Polish] apartments are built with the use of excellent materials and have a comfortable layout. Windowed kitchens, for example, which are a must in new apartments in Poland - even in the popular segment - ceased to be the standard solution in the West a long time ago. In this sense, we have come an incredibly long way.
On the other hand, our market is not yet developed in terms of projects' versatility. What the market lacks are large mixed-use developments. That is mostly due to their huge costs and the fact that there is not that much money in the Polish market. Prices in Poland are still lower than in many other countries, although, as recent years have demonstrated, Poland is catching up with the West in this regard very quickly. It is already evident that apartment prices in Poland, which is an expensive country in general, will be some of the highest in Europe.
What about the market's development in terms of developers' credibility and the safety of apartment-purchase transactions?
Unlike many countries, Poland has virtually no legal regulations pertaining to developer-client relations. In practice, however, the developer system is working very well. In Germany, there are a number of spectacular developer bankruptcies, involving the loss of clients' money, every year. In Poland, such things happened before the market crisis of 2001-2002 and have not, for the most part, been seen since then.
What role does the Polish Association of Developers play in the process of setting quality and safety standards in the residential market?
For one thing, the association is involved in efforts aimed at securing legal and institutional regulations related to developers' activity. That has had moderate results so far. The existing legislation is tragic and no government will probably be able to change that. Developers, however, somehow manage to interpret and implement [the law], so perhaps amendments should not be introduced after all, as they usually bring about a stalemate that lasts for a couple of years.
For another thing, the association groups companies that want to employ and promote high standards in their activity as developers. We have, for instance, drafted a code of good practices and the awareness of a social mission seems to be higher among the association's members than among non-affiliated firms. That is of crucial significance as we deliver one of the most important products for the functioning of modern society. Securing membership in the association is not an easy thing and we have already seen expulsions of companies which acted [in a manner contrary to the association's] ethics.
How do you view the current slowdown on the residential market?
The development market has always been a cyclical market. It was to be expected that, after a period of dynamic increases in demand and rapidly growing prices, the trend would reverse. I hope that the fluctuations will not be so large now, especially since there are a number of developers - Dom Development being one of them - which have postponed the delivery of some projects because of diminished housing demand. Once demand grows, the projects will be introduced onto the market and a situation in which supply is low and prices start to increase will be avoided.
Is the slowdown related to market crises in countries such as Ireland and Spain?
The slowdowns in Poland and in Western Europe have coincided but they have had different backgrounds. Both have been caused by an oversupply, a temporary one in Poland and a more systematic one in the West, but the real difference is the fact that the crises in Spain and Ireland have been accompanied by the collapse of the mortgage system. The level of debt in Poland is still relatively low and banks have so far had no lending problems.
Despite the slowdown and lower apartment sales, Dom Development has presented very good Q2 results. Why is that?
That's because of the accounting system, which shows profits that we made last year and reflects our good performance during the peak of the residential boom. The current, more difficult situation in the market will be reflected in our financial reports in 2009.
What are Dom Development's major investment plans for the near future?
We are now starting to expand beyond the capital with our first project in Wrocław. We have been consistently building our position in Warsaw and now that we have a market share of 10-12 percent there we have to think of being present in the other large Polish cities as well. Warsaw, however, will of course remain our main market, in which we will continue to deliver both popular, higher level and luxury apartments, although the offer will depend on how the situation in the market develops.
