Residential construction moves up a gear

How much has the level of new residential construction grown recently? 140 pct – according to data published by the Polish Central Statistical Office (GUS). This was the increase in the number of apartments that developers received building permits for in March compared to the same month last year. This allows them to construct 8,723 apartments – the highest figure since April 2012 (9,634). Apartment builders have also recently started many new projects. March was the ninth month in a row that the activity of residential developers continued at a high level. In this month they started the construction of 6,000 new apartments – a 35.1 pct increase on March last year. Such high dynamics are partly the result of the low base. In March 2013 we were still faced with a low number of newly marketed projects. This was a consequence of the so-called ‘development act’ that had come into force ten months earlier. To avoid the impact of this legislation, developers marketed a huge number of apartments before it could come into effect (at the end of April 2012). As a result, the number of projects started in the subsequent period this was low. The revival of activity, in terms of the new projects that we can see today, has been supported by cheap loans, low interest rates on deposits and a subsidy programme for new apartments. These factors have combined to result in the highest sales volume in six years for residential developers. Since the middle of last year, the number of projects launched has usually been higher than the number of permits issued. This might have raised concerns that any further intensification of development activity could hit a barrier in the form of a shortfall of plots formally prepared for construction. However, these worries have been dispelled in the last few months. The increase in demand, which has been noted by developers since the middle of last year, is slowly translating into a greater number of building permits being issued. Furthermore, the current base of unused permits would allow developers to start construction work on an estimated 37,100 apartments. This is how many more permits have been issued in the last three years (the validity period for such permits) than the number of projects that have been started. It’s likely that at the current level of developer activity, the reserve of permits they hold would be enough for as many as seven or eight months of their operations.