Spatial laws in a vacuum?
New legislation on spatial planning is another. Most construction companies which had previously been granted permission to start building, will now have to apply for new 'terms of construction' under less favorable conditions and, for some work already underway, this might mean bringing a halt to it altogether.
The new 'terms of construction' entail different obligations as far as the positioning of buildings is concerned and this can lead to confusion.
The changes give ample opportunity to officials to interpret laws for their own benefit and have the potential to increase the level of corruption in Poland. If local authorities do insist on following the new obligations to the letter of the law, some construction firms are likely to go bankrupt, as they will not be able to keep to their deadlines and will be vulnerable to the huge fines which are provisioned and stipulated in their contracts with developers. This situation is already affecting three companies in Warsaw, who want to remain anonymous to avoid causing panic on the market. They have already applied for the new 'terms of construction', but if the permits are narrower in scope to those they previously worked with, they feel that bankruptcy is a real possibility, though they will seek recourse through the administrative courts, as this may be their only hope of protecting themselves. Given that legal cases are often prolonged in Poland and that the new regulations will, in all likelihood, guarantee their bankruptcy when they come into effect, these construction companies will also claim financial reimbursement.
Some real estate professionals believe that the new legislation will contribute to the less intensive construction of hotels and office buildings in Warsaw's CBD, than has been the case until now. However, developers could well give increased preference to the outer-lying districts of the city, where it will be easier to acquire 'terms of construction.' Market analysts are also predicting some reduction in the prices of land in the Sródmieście and Mokotów districts, though the companies leasing space there may end up having to pay higher rents, as these could well increase by 5-10 percent over the next five years, as a result of the new regulations. Time will tell how exactly the new legal situation will affect developments but the worst case scenario is that some will disappear from the market, leaving unfinished buildings that will have to be demolished at the Polish taxpayers' expense.
The new 'terms of construction' entail different obligations as far as the positioning of buildings is concerned and this can lead to confusion.
The changes give ample opportunity to officials to interpret laws for their own benefit and have the potential to increase the level of corruption in Poland. If local authorities do insist on following the new obligations to the letter of the law, some construction firms are likely to go bankrupt, as they will not be able to keep to their deadlines and will be vulnerable to the huge fines which are provisioned and stipulated in their contracts with developers. This situation is already affecting three companies in Warsaw, who want to remain anonymous to avoid causing panic on the market. They have already applied for the new 'terms of construction', but if the permits are narrower in scope to those they previously worked with, they feel that bankruptcy is a real possibility, though they will seek recourse through the administrative courts, as this may be their only hope of protecting themselves. Given that legal cases are often prolonged in Poland and that the new regulations will, in all likelihood, guarantee their bankruptcy when they come into effect, these construction companies will also claim financial reimbursement.
Some real estate professionals believe that the new legislation will contribute to the less intensive construction of hotels and office buildings in Warsaw's CBD, than has been the case until now. However, developers could well give increased preference to the outer-lying districts of the city, where it will be easier to acquire 'terms of construction.' Market analysts are also predicting some reduction in the prices of land in the Sródmieście and Mokotów districts, though the companies leasing space there may end up having to pay higher rents, as these could well increase by 5-10 percent over the next five years, as a result of the new regulations. Time will tell how exactly the new legal situation will affect developments but the worst case scenario is that some will disappear from the market, leaving unfinished buildings that will have to be demolished at the Polish taxpayers' expense.
