The price of bureaucracy
What are the main factors of the rising cost in the construction industry?
The basic factor is the rising cost of production, driven by the growth of materials prices. The domestic supply is insufficient. Consequently it is quite common to buy materials abroad, in Ukraine, Slovakia, the Czech Republic, Germany, Scandinavia, or even further afield. This of course adds to the price. The question of building plots is the second-most important factor for the growth in prices. The problem lies in the lack of zoning plans for large areas of cities such as Warsaw. This complicates the purchase process and translates into higher costs. Still, the authorities do not seem to recognize the issue's importance. The third factor for price growth is bureaucracy, as the time it takes to complete formal procedures has doubled over the past three years.
What are the consequences of the rising costs for developers and how should they be addressed?
As the costs of mortgages have dropped, purchasing power has rocketed. In effect, developers saw the boom as an opportunity to make a quick profit. Many of my colleagues, though, did not predict that the prices of plots would rise quite so much. In effect, they were unable to complete the investments for the prices set in sales contracts. At present, a lot of developers - even the most prestigious ones - are cancelling reservation contracts. I think developers will discontinue reservation contracts and will turn back to the index contracts, where the price of a flat takes into account the rising cost of its construction.
How does the growth in cost affect the quality of construction?
The quality and the professionalism of developers in Poland definitely meet Western standards, even though Western developers are in a much better situation. Their laws and administration support them. In turn, our poor regulations and excessive bureaucracy simply kill opportunities and hinder development.
Do new technologies - especially prefabricates - provide an opportunity to reduce production costs in Poland?
Definitely, this is a solution that speeds up the construction process and works well, even in Poland's harsh climate. Moreover, prefabricates do not have to mean less comfort. On the contrary, they often raise the standard of a building.
One of the construction industry's biggest problems is a scarcity of workers. What do you believe is the solution?
We are counting on the government to make wise decisions. The government should open the market to foreign workers from countries such as Ukraine or from the Far East. We also need to invest in training local people [for such jobs] especially in areas with high unemployment. I think that private schools and groups that organize such trainings will soon emerge. It is also possible that Polish workers abroad will begin to come back. These people may no longer want to be separated from their families here. Having aquired know-how abroad, many will open their own businesses in Poland.
