Looking Inside the Lokale List
By : Greg Goodale
Rural retreat: Quiet surrounds attract buyers to Villa Czarny Las.
Most Poles still can't afford single-family homes despite the growing market of mid-priced housing, according to an April report by REAS Konsulting (http://www.reas.pl) and Arthur Andersen.
While affordable new apartments make up 74% of the market for 2001-2002, new single-family houses, comprising less than 5% of the market in Warsaw, have a long way to go before becoming affordable, the report stated.
Only 4% of single-family houses built in Warsaw can be grouped into the affordable category below $60,000. The authors of the report said affordability is the main obstacle to the expansion of the sector as the research confirms that most Poles want a single-family house.
"Contrary to the multi-family segment, the evolution of the single-family house segment is much less advanced," the report said.
Until now, many Poles have chosen to build their own houses rather than buy an expensive one from developers. But this could be changing.
Renata Osiecka, residential associate at U.S.-based Colliers International (http://www.colliers.com), said the trend for do-it-yourself (DIY) houses is becoming less pronounced. Residential construction has traditionally been the work of cooperatives in Poland, so private individual building has been the only alternative. "This is going to change as there are more good housing developers such as AIG (/Lincoln), GTC (Globe Trade Centre) or Villa Czarny Las," Osiecka said.
For Marek Dabrowski of the Polish Real Estate Fund there are many problems within the housing industry that constrain the market. "There is a significant issue with overburdened developers in terms of regulations, delays and problems with the appeals process," Dabrowski said.
He also said bribery is widespread and gminas are unable to connect new developments to main roads due to underfunding. "At the same time we have this huge explosion of new developers," he said. "I think it's a miracle that so much is being built."
Nicholas Evans is the director of Villa Czarny Las, a single-family-home commuter development near Grodzisk, a small town located about 40 kilometers south of Warsaw. Evans is bullish on the positive attitude the Grodzisk authorities have shown toward his development; they have collaborated on a water treatment plant. But telecommunications have continued to be a sore point.
"It's taken us five years to get telephone lines, these aren't going to be ready until June this year," he said. For Evans, marketing homes in Poland is a battle, especially with the current high interest rates. "They've got to start coming down," he said. "Who will buy a house at a 23-24% interest rate? They just can't afford to do it. Especially when inflation is 8%. That's a real interest rate of 16%. I'd like to see interest rates come down to 4% above inflation."
Marek Dabrowski said the immaturity of the market has meant that quality has not always been at the forefront of developers' priorities, thus deterring buyers. "There were many problems because a lot of developers that entered the market had no idea what they were doing," Dabrowski said. "They were underfinanced and there were a lot of failures and problems with quality." But he said market forces are increasingly beginning to work. "Apartments are not going up in price and the quality is getting better," he said. "Every product appearing on the market has to be better than before. Developers who have a bad name will disappear from the market."
Lower land prices outside the city have allowed developers more financial leeway to offer better quality. "We don't cut corners," Evans said. "We have ceramic roof tiles, traditional building quality and we use facing bricks. We have decent kitchens, and good inset lighting."
The availability of land around Villa Czarny Las allows Evans the freedom to plan additional leisure facilities into his development to make it more attractive to prospective buyers. "We've been advised, and we believe ourselves, that we need a social heart to our development," he said. "This heart will consist of a four-star British country club hotel, with snooker tables, swimming pool, squash courts, tennis courts, a library, British pub, restaurant, 70 bedrooms and conference-seminar facilities."
Marek Dabrowski is optimistic about the future of the housing market. "It is, and will continue to be, one of the more attractive lines of business in this region for a number of years to come," Dabrowski said.
"If you look at the macroeconomics, many factors point in this direction," Dabrowski said. "You have a grossly underhoused population, especially in terms of quality. You have a housing stock that is substandard, depreciated, and a lot of it will have to be either totally renovated or demolished. But at the same time you have a population that is getting wealthier."
