Rickety figures

JW Construction (JWC), the capital's largest homebuilder, reported weak quarterly sales results in Q1 as higher housing prices and tougher lending conditions have exhausted demand, its chief executive said. The firm sold around 200 apartments in the first quarter, compared with nearly 700 in Q1 2007.

"In the first quarter we sold around 200 apartments for the whole quarter, whereas in the fourth quarter sales were 200-300 monthly," said CEO Jerzy Zdrzałka in a press conference.

JWC's share price dropped to a record low on the news, hitting zł.28.58. By week's end it had fallen to zł.28.20.

"I'm surprised that JW Construction showed such poor results, when their competitor, Dom Development, sold over 330 apartments in the first quarter," Maciej Wiewiórski, an analyst with IDM SA told Puls Biznesu.

Grzegorz Maliszewski, an economic analyst with Millenium Bank, said that Polish housing prices were still relatively high and the demand for reasonable mortgage rates had kept many Poles out of the housing market. "Looking at prices on the primary market, in just two years prices have increased from between 50 percent to even 100 percent in some locations," he told WBJ. "This concerns new dwellings in relatively attractive places."

Zdrzałka was confident the company would meet its projections. The company needs to sell 1,200 apartments to do so, but it is determined to sell as many as 2,700 this year and increase its net profit to zł.219.7 million.

The company is trying to boost results by further expanding into neighboring markets where it sees potential for investment. "Russia is going to be our [next big] market, but we are also looking at Ukraine, which is heading in a good direction in Europe, and I'm sure this year we can tap into this market," said Zdrzałka.

International developments account for some five to seven percent of JWC's revenues, but the firm wants to eventually increase this to 30 percent.