Have developers changed the way of financing the construction of new housing investments? By how much has the cost of crediting projects in banks increased? How did this affect housing prices?
Tomasz Kaleta, director of the Sales Department of Develia S.A.:
So far, our estates have been built mainly with our own funds and current payments from our clients. Thanks to well-designed investments and high demand, there was no need to use external financing. In the face of the decline in the sales rate, we are currently processing loans for several larger investments, co. will translate into an increase in implementation costs.
Yaron Shama, CFO of Ronson Development:
In each implemented project, we verify the method of its financing as well as the terms of the loan and the associated risk assessment. We usually focus on financing our investments by local banks, but we also check financial institutions outside Poland. At the moment, the difference between them is not significant, but an important element of risk is the issue of the exchange rate when obtaining financing from abroad.
Unfortunately, WIBOR, after increases in recent months, has become an important element of the total interest rate. In the projects we started a year ago, the effect is not big, because we have secured the sale of apartments and the credit exposure is not high.
On the other hand, we expect interest costs to be higher for newly launched projects, as sales are lower than in previous years and the construction phase will be more dependent on bank financing and less on customer advances.
The increase in financial costs is only one factor that affects the price of housing. Others are the supply-demand relationship, inflation, and high mortgage rates, which have a much greater impact on selling prices.
Angelika Kliś, member of the management board of Atal:
Each project has planned sources of financing. Due to the increasing cost of financing with external capital, the Group took steps to diversify the sources of financing, and thus reduce the cost of loans. Increase in interest rates on bank loans to even over 9%. on an annual basis is mainly due to the increased interest rates by the MPC. The current cost of financing construction projects is therefore unacceptable for large and good developers, as it would have to increase the costs of implemented projects.
Adrian Potoczek, Sales and Marketing Director at Wawel Service:
Market volatility, including price fluctuations, are inherent in the real estate industry. Wawel Service is a recognized group that is trusted on the financial market. We notice a tightening of banks’ lending policy with regard to financing development projects, but we have no problems with obtaining financing for new projects. We still want to finance them with bank loans. When it comes to real estate prices, the cost of financing development projects has more than doubled in recent months. This is related to the changes in the WIBOR rate, which at the beginning of the year was 2.5% and now over 7%. If such a high cost of financing continues, it will certainly translate into an increase in housing prices.
Joanna Janowicz, managing director at Constructa Plus:
So far, we have only carried out one project in cooperation with the bank. We finance other investments with our own funds. This is a good solution for clients who feel safe in such a situation, knowing that we have secured funds for the entire project. The cost of money is an important item in the investment budget, taking into account the current situation on the financial market. In addition, the uncertainty on the building materials market means that they have to be more cautious about risk calculation and hedge against it, which of course also affects the increase in costs. And at the same time, we must not forget about the additional burdens introduced by the amendment to the developer act.
Sebastian Barandziak, President of the Management Board of Dekpol Deweloper:
We are constantly monitoring the situation on the market, so far we have not noticed an increase in margins on the part of banks. The cost of financing has increased in proportion to the observed interest rates set by the MPC which have a direct impact on the WIBOR reference rates and constitute a component of the financing of development projects. The increase in the above-mentioned costs does not significantly affect the prices of apartments.
Grzegorz Kopacki, vice president of the board of Homeland Development:
The cost of financing has increased drastically. The interest costs of a development loan, not counting commissions and many loan-related costs, are about 11 percent today, and a year ago it was about 5 percent. We also see greater caution in lending by banks. Fewer and fewer business plans are getting the go-ahead on credit committees. Projects that were acceptable a year ago are rejected today. The problem is that it is difficult to negotiate housing prices, apply a promotion per square meter, because the minimum prices are stipulated in loan agreements. In a business plan, the cost of a development loan is often passed on to the recipient of the product.
Marcin Michalec, CEO Okam:
Like other companies operating on the market, we feel the increase in the prices of building materials and raw materials, which naturally translates into higher costs of implementing current projects and will certainly also affect future ones. Our subcontractors, mainly General Contractors, impose on us certain costs of building the investment, in connection with the expenses they incur. Due to the global economic situation, these are higher than in previous years. A consequence of the several percent increase in construction costs is higher housing prices for end consumers.
Wojciech Chotkowski, president of the management board of Aria Development:
Our latest investment, Osiedle Natura 2 in Wieliszew, has so far been carried out without external financing. We managed to implement 2/3 of the entire project from our own resources. Due to the scale of our future investments, we are open to talks with banks and private funds. As the Aria group, we have diversified our activities, thanks to which we have sufficient funds to implement new projects.
Source: dompress.pl
