Budner leaps into new areas

Gregor Sobisch, the president of the board at Budner: Our company has specialised in general construction and the execution of housing projects so far. Now we are taking a turn as the company’s profile is to be extended into additional strategic operations that are to facilitate and speed up the further development of the company. General construction will be one of the arms of our business growth. Today many apartments and offices are being delivered to the market, so obviously we need to be prepared for a bit of shortness of breath – probably for the next two or three years. Extending our profile is our priority now. For this reason we have set up Budner Infrastruktura, which will bring us engineering work expertise. We have already hired engineering specialists and are now in negotiations over our first engineering deals. This is where we will be looking for a niche for ourselves in the first place.

What will you be looking at next?

Apartments for lease are going to be increasingly needed on the Polish market. This is a huge segment in other countries. If you look, for instance, at the German market, you will see that there are large corporations such as Vitter, who buy several thousand apartments and make profits from leasing them out. In Poland there is still a lack of that sort of business but the first few signals can be seen. These include BGK Nieruchomości, for example. We know that the international funds that could potentially be interested in investing in these sorts of projects are now also emerging. Globally, there is a lot of equity that wants to be accumulated somewhere, and bank margins are currently exceptionally low, so properties are an interesting investment alternative. We have signed one contract with BGK Nieruchomości so far. We sold the Mokotów City project on ul. Samochodowa in Warsaw. The 116-apartment development has already been launched. Although the residential development margin is lower compared to retail investment, you need to remember that we are also a contractor, so we can generate a good margin here. There are two more projects ahead of us: in Gdańsk and Kraków. In the case of the former, we have already bought a plot that could hold app. 100 apartments. We have also secured a plot in Kraków. In short, we use the synergy effect.

Another direction might be...

We are also thinking about expanding internationally. Our people are well prepared for taking on construction projects in, say, Berlin. Why Berlin? Because it is the fastest growing European metropolis and it happens to be located close to Warsaw. We want to focus on one city in Germany because we are a relatively small company. Besides, I believe that Warsaw and Berlin are similar. But in terms of market trends, Germany’s capital city is ahead of Warsaw by a dozen or so years. Our operations in Germany will be our second limb, so we are looking for future development partners there. Another German market segment we are interested in is accommodation for the elderly. The legal situation in the country is stable and regulated, while the demand for this kind of project is very high there. We see the chance to build more than a dozen such projects over the next few years. We aim to enter the market together with a German partner and perhaps return to Poland in a few years in order to use the experience we should have by then. I would like to stress one more time that we are not a huge company that can compete for large contracts on the market, so we will be looking for niche projects.

Is student housing also a niche?

Yes it is. We have already prepared a dorm project in Warsaw. We will soon apply for a building permit. It is to be built near the Słodowiec metro station. I know that the demographics are not on our side now but we are talking with universities and we know that Poland is an attractive European country for students on the Erasmus exchange programme. Coming back to Słodowiec: the first stage will involve the construction of 420 superior quality rooms. This is the first of many similar projects we are planning. We want to create a chain of private student houses – and the Dwell Well company has been established for this purpose. Another dorm project will be built on the other side of the Vistula. We are securing a plot on ul. Grochowska and working on the design now. Both buildings are planned to be launched in the summer of 2018.

Are you considering other Polish cities?

We are buying a Kraków plot and are also interested in Wrocław, Poznań, Gdańsk, Rzeszów and Lublin.

How will you finance the projects you have mentioned?

With the help of the banks. We also have our own funds from the profits we have generated.

Will they also come from listing the company on the WSE?

When the time is right, probably in three, four or five years’ time we will float the company on the Warsaw stock market. In order to do this we will first try to extend our operations, increase our growth potential and diversify our portfolio. This is not the right time for us to debut on the WSE.