Plots like hot cakes
Investment & finance
Tomasz Szpyt, ‘Eurobuild CEE’: Which group of developers is mostly buying plots for new projects in Poland?
Daniel Puchalski, the head of land advisory services for Poland, JLL: Residential plots in Warsaw, Kraków, the TriCity and Wrocław invariably enjoy a lot of interest. There is slightly less demand for such properties in Poznań. In addition, individual investors are expressing an interest in residential projects in cities such as Łódź, Katowice and Szczecin. However, they are mostly local businesses, with a few exceptions in the form of foreign investors who already hold investment land in these cities and are looking for partners to carry out joint enterprises.
Are land prices growing as a result of the increased interest?
In the first few months of this year we observed a slight growth in the prices of residential plots compared to the levels last year. It is also worth noting that investors are currently characterised by a more flexible approach to the issue of conditions precedent in sales transactions. Considering the amounts declared by investors earmarked for buying investment land this year, and provided that a sufficient amount of investment land for residential construction comes onto the market that is prepared in terms of legal, urban planning and technical issues and situated in attractive locations from an investor’s point of view, we could register transactions totalling as much as PLN 1.5 bln. However, it has to be admitted that reaching such a level of land sales is unlikely at this point due to the complicated status of many plots available on the market – and this will need time to resolve. Factors that can lengthen the investment process include technical, infrastructural and geological issues, property claims, and the lack of zoning plans. The rhythm and pace of negotiations taking place at the moment for land acquisitions is being determined by a few investors characterised by high flexibility, efficient organisation and speedy decision making – and this is motivating others to act in a similar way.
What about office developers? Are they still buying or are they focusing on developing plots they already hold?
Despite the substantial volume of land under construction and the significant vacancy rate, we are continuing to receive enquiries from investors interested in purchasing plots earmarked for offices in Warsaw, Wrocław and Kraków. According to our forecasts, in 2014 we can expect sales transactions of such land with a combined value of PLN 500–700 mln. The ultimate volume will, however, depend on whether all the transaction conditions are fulfilled before the end of the year and whether the eventual value of the purchase/sales agreements is not significantly reduced as a result of negotiations.
Are plots earmarked for shopping centres a product that developers are interested in? Where can they still build such projects?
According to our research, 2014 should also be a good year for plots earmarked for retail development. We expect that a number of large transactions will be closed in Warsaw, Poznań and Gdynia as well as in a few medium-sized towns. It is highly likely that at the end of the year the total value of retail plots sold will reach PLN 400–600 mln, more than half of which will be Warsaw purchases.
Who is selling the most land at this time?
There is a lot of activity in land property turnover at this time and actually every plot which has a local zoning plan, a land development conditions decision or a building permit is analysed by one or more investors. Besides, the decree claims market is experiencing another revival. Land is being sold by the Agricultural Property Agency, the Military Property Agency, the Polish State Railways and a few other large organisations and firms. However, the most noticeable group apart from those are the banks, which are now becoming increasingly active in selling land.
