What are the biggest challenges developers will have to face in 2022? What will be conducive to the development of the housing market? The survey was developed by the real estate website dompress.pl
Tomasz Kaleta, director of the Sales Department at Develia S.A.:
The biggest challenges for the housing market in 2022 will be the situation beyond our eastern border, progressing inflation and more expensive building materials, which, combined with their deteriorating availability, may cause delays in project implementation. Interest rate increases and the entry into force of the new recommendation of the Polish Financial Supervision Authority, introducing new rules for calculating creditworthiness, may thwart the plans of buyers who have to take advantage of mortgage financing. High prices and the low availability of land for development remain a constant problem.
The market will be supported by the demand from investment buyers – both individual and institutional. The former will continue to invest their capital in real estate, because, despite the increases, with double-digit inflation, the real interest rate remains deeply negative. Flats that have become 10-12 percent more expensive in recent years. per year, they work well as assets to protect savings against impairment. It is worth mentioning here that in 2021, cash buyers were responsible for 50 percent. of all transactions, and currently this percentage is as high as 70 percent. In turn, investment funds will be even more interested in purchasing large packages of premises or even entire housing estates in order to offer them under institutional lease (PRS). We expect that the demand for this type of real estate will increase as a result of the migration of refugees from Ukraine to Poland and the transition to the rental market of people who have lost their creditworthiness.
Adam Urbański, Sales Director at TDJ Estate:
The biggest challenge that almost all investors have to face right now is the problems with the liquidity of supplies caused by the pandemic and exacerbated by the armed conflict in Ukraine. Shortage of raw materials, high material prices, lack of manpower and, consequently, very high construction costs. On the other hand, high construction costs translate into the selling prices of apartments. Also, the introduction of the new developer law will not make our life easier in 2022. It will affect not only developers, but also indirectly consumers and investors of residential space.
Difficult and relatively expensive credit and lower creditworthiness of buyers are also becoming a big problem. What will be favorable for us is the migration and arrival of a large number of refugees from Ukraine, who have generated a lot of traffic on the apartment rental market or decide to invest and settle in Poland. This situation may also accelerate the development of the PRS rental market. Funds seeing the potential for this type of services in Poland will be more and more willing to buy from developers even entire housing estates, as was the case in Germany, in order to rent them long-term.
We should also remember that there is still a shortage of housing substances on the Polish real estate market. Compared to Europe, Poland ranks at the bottom end of the number of flats per 1000 inhabitants. It is also a strong trend that has driven domestic developers over the years, and it looks like it will remain so.
Zbigniew Juroszek, President of the Management Board of Atal S.A.:
This year, we estimate that contracting will amount to around 3–3.5 thousand. premises. This year’s contracting plans, lower than a year ago, result from prudence. In the current situation, we estimate the achievement of approximately 75 percent. what we would expect under normal circumstances. This is a very conservative estimate. In this calculation, we take into account the slowdown in buyers’ decisions due to uncertainty. Clients and banks have to find a golden mean, how to finance themselves in the transition period, when money is more expensive. However, you should not expect a sharp departure from real estate purchases by customers. We believe that we still have a structural shortage of housing in Poland, which stimulates the market.
Adrian Potoczek, development director at Wawel Service:
Huge turmoil in the mortgage market, the highest inflation in twenty years, staff shortages, rising prices of building materials, the war in Ukraine and the uncertain geopolitical situation in Europe … All this will affect the real estate market. Of course, we are prepared for that. We also have an extensive land bank secured, which guarantees us the smooth initiation of new projects. However, we hope that in a few or several months the situation will start to return to normal.
Andrzej Gutowski, vice president, sales director of Ronson Development:
Uncertainty in the markets, shortages in the supply of goods, as well as increases in the prices of materials and services are challenges faced by many industries, including the developer sector. Nevertheless, the real estate market is still one of the most stable forms of investment, also in times of economic turmoil. Investing in real estate gives you a sense of capital protection and even gains in excess of inflation.
Certainly, an increasing number of people will not be able to afford a flat, which will result in a strong development of the rental market. There is scope for PRS development here. This is the second pillar of our business that we will intensively develop. By the end of 2025, we want to deliver 3,000 apartments for rent in Warsaw, Wrocław and Poznań. Until then, our land bank in the PRS segment will be secured for approximately 5,000 units.
Cezary Grabowski, sales and marketing director of Bouygues Immobilier Polska:
There is no shortage of challenges, the rapidly growing construction costs and the instability of the overall macroeconomic situation are the most important. From the buyers’ point of view, the challenge may be the diminishing creditworthiness and the smaller offer on the market. On the other hand, Poles have significant funds deposited in bank accounts. High inflation can encourage them to invest in the real estate market. The more so as we are already seeing an increase in rental rates due to the influx of Ukrainian citizens.
Joanna Janowicz, managing director at Constructa Plus
The biggest challenge in 2022 for entities operating on the housing market and in the entire Polish economy in general is uncertainty. We are aware of the existence of such phenomena as inflation, broken supply chains, less access to employees, limited financing of individual and institutional investments, and we know that all of them have a negative impact on the market. We are now facing enormous market uncertainty, perhaps the greatest since the economic transformation of the 1980s and 1990s. At this point, a lot depends on how long the war in Ukraine will last.
Paradoxically, the migration of people from Ukraine may be a factor favoring the Polish housing market. You can already feel the pressure that local governments are trying to exert on investors to create new, relatively inexpensive flats. If new housing is to be built, additional land is needed. I see this as an opportunity to introduce construction plots from the National Property Stock and state-owned companies to the market. Polish clients, whose interest rate increases have excluded from the market and are waiting for inexpensive apartments for rent, can also benefit from this.
Source: ISBnews
