January 25, 2022

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Apartments: Red Market Square.  What then?

Apartments: Red Market Square. What then?

1. PRS grow stronger

Investors turned to the taps with money, and the Poles saw the advantages of renting apartments from professional entities. As part of the ongoing PRS (Private Rental Sector) projects, there are currently 6,200 completed apartments and another 25,000 apartments. Buildings under contract or under construction. However, a small percentage of all apartments are still for rent in Poland, the total number of which is estimated at about 1.2 million units. Experts predict that by the end of 2025, about 2 billion PLN may be allocated for investment in the poverty reduction strategy of our country.

2. Amazing transactions in the corporate rental sector

In May 2021, Heimstaden Bostad AB, the third largest owner and operator of residential rental property in Europe, acquired thirteen projects, with approximately 2,500 apartments with a total area of ​​more than 131,000 square metres. square meters of the company Budimex Nieruchomości. Earlier, the same investor bought about 1,300 apartments from Marvipol and Eiffage Immobilier.

One of the most exciting deals in 2021 in this sector is the signing of an agreement by developer YIT with the NREP (Nordic Real Estate Partners) fund, under which it will build and sell more than 1,000 units to the investor. All apartments will be designed for rent – this is the first NREP residential investment of this kind in Poland. The fund already has a portfolio of 10,000. Apartments for rent in Scandinavia. He intends to double this figure thanks to investments in Poland, including in Warsaw, Trieste and Wroclaw.

3. Significant acquisitions

In May 2021, Budimex sold its subsidiary Budimex Nieruchomości to the Cornerstone Partners fund and Czech developer Crestyl for approximately 1.51 billion PLN. This acquisition is the first step to establishing one of the major players in the real estate market in Central and Eastern Europe.

Earlier, in February 2021, Echo Investment entered into a preliminary contract to purchase 66.01 percent. Archicom shares from three natural persons, the founders of the company, the price of the largest stake was 425.1 million PLN. As of 2019, the main shareholder in Echo Investment is Wing, one of the largest real estate companies in Hungary.

4. Despite the high prices, the supply of new apartments is quickly disappearing

New apartment buyers will remember 2021 as the time of the largest available apartment shortages in history. The pandemic significantly expanded the process of introducing new housing investments, which, with continued demand, limited the choice. However, this did not discourage potential buyers who did not abandon their purchases despite the high prices, and over the past five years these have increased by 29%. In Pozna 52 percent in وودód, 56 percent in Warsaw, 60 percent in Wroclaw, 65 percent in Krakow, up to 75 percent. in Gdansk.

5. New Development Law 2021

In May 2021, the House of Representatives adopted a new law on protecting the rights of buyers of an apartment or a single-family home. One of the biggest changes under this law is the creation of the Development Guarantee Fund (DFG). Developers will be required to pay an additional 1% premium calculated on the total price of the buildings. In the open state, 0.1 percent. Closed residential escrow account.

Funds paid to DFG will be used to make customer payments, incl. In the event of bankruptcy of a developer or a bank that maintains an escrow account. The law also introduces the maximum amount of the reservation fee, which can not exceed 1%. The price specified in the prospectus. Further, the booking fee must be returned to the customer in the event that he does not obtain a positive credit decision. In addition, prefabricated buildings, which were purchased from the developer after obtaining an occupancy permit, will also be covered by law.

1. Polish system – apartment without private contribution

The new law as part of the Polish deal is to introduce the possibility of collateral coverage of part of the mortgage loan obtained for the purchase of an apartment in the spring of 2022.

This guarantee will replace the down payment requirement of the buyer. The part covered by the loan will be able to account for at least 10 percent. And not more than 20 per cent. Expenses for which the loan will be taken.

The law also includes mechanisms that limit the risks of stimulating the growth of housing prices, that is, the maximum price per square meter of flat area. The new regulations also stipulate the maximum limits of funds that will be transferred from the state budget to the state housing fund for legal purposes. In 2022 it will be 100 million PLN, in 2023 – 200 million PLN. These funds will be increased each year to reach a value of PLN 2.15 billion in 2032.

2. Will the Poles continue to buy apartments in order to invest their capital?

In October and November we saw the first rate hike in 9 years. To date, about 30-35 percent. Apartments sold by developers went to individual investors. With prices rising, it was an attractive capital investment for many of them.

In recent quarters, some clients have fled to the housing market, thus protecting capital from rising inflation. Price increases may dampen speculative demand in the short term. However, it appears that this will not have a significant impact on sales rates which are mainly determined by rising land and manufacturing prices.

3. Sector standardization

There are more than 600 development companies operating in Poland. The largest companies sell several thousand apartments annually, but maintaining this size, with a limited supply of land, is becoming more and more difficult. Thus, in 2022, we can expect more acquisitions in the industry. Consolidation will also take place at the level of Central and Eastern Europe. One great example of such activities is already underway – in the last quarter of 2021, Goldman Sachs put 100% of the shares for sale. Developer Robyg shares. An important item in the developer’s assets was the land bank – according to the company’s information, it makes it possible to create about 23.3 thousand square meters. Introductions. It is estimated that the value of the transaction could reach 3 billion PLN, and many foreign investors will be interested in buying the shares.

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