Frozen margins
Banks operating on the real estate market loathe being classified under a common denominator. So-called universal banks – such as mortgage banks and also non–mortgage banks – but specializing in financing real estate are now active in this sector. Additional dividing lines define the kinds of ventures for which banks grant loans (commercial and housing projects, as well as investment real-estate acquisitions) and also over the customers they mainly cooperate with – institutional and individual).
On their own
Widening the range of possibilities
The housing industry is another segment of the market which until recently aroused little enthusiasm among bankers. But the housing boom has led to the business becoming much more attractive, despite the fact that not all property banks are yet financing housing developments. One such example is Aareal, which is simply not interested in financing homes. True, Investkredit did grant three such loans, but they were for regular and proven customers. “This is mbecause of banks’ general policies. Their HQs abroad still remember the stormy Polish residential market in 2000-3 and now they don’t want to take the risk,” says Sven Kain, member of the board of BRE Bank Hipoteczny, which is financing both residential and commercial ventures. “The lack of staff is another issue,” he adds. “The branches of foreign banks are simply too small to service one more market segment. There are app. 100 employees in our bank, and among them are valuers travelling round the country checking out different projects.”
When considering whether to start financing housing projects, in what is still regarded as a rather risky business, the stronger competition among banks is of no small significance to such market players as Aareal and Investkredit. The fact is that universal and ordinary mortgage banks that also cooperate with individual customers are granting home construction loans. As a result the profit can be two–fold: from the loan for the developer and on mortgage loans for its customers. Hans Koeppen admits that: “We have no branches dealing with home–purchasing individuals, and the time a development loan is paid back for putting up a block of apartments is around 18 months, which is rather unprofitable.”
Money just loves gifts
Several barriers exist on the road to improving relations, which the UPB lists as the absence of an obligation for developers to run an escrow–type trust account, the absence of a guarantee fund to minimize the financial risk of housing projects, the foot–dragging of the courts to enter mortgages into permanent usufruct registers, the absence of spatial development plans and the sluggishness of local administration to issue building licences. There are many obstacles to be overcome, but Michał Wydra looks optimistically to the future, since people want to find places to live in, developers want to build and the banks want to make profits when financing those developers. The only remaining question is – what are these loans going to cost?
