Dropping like a brick

We all fall down

The result reported by the ‘big five’ (those developers that sold over 2,000 apartments in 2017) were even worse, although the percentage falls varied widely. The largest such developer is still Dom Development which recorded a y-o-y fall of around only 9 pct (from 3,975 to 3,602 apartments). “The factors that significantly reduced the scale of the market in 2018 included the high price of development land, difficulties when applying for administrative decisions (especially in Warsaw), the labour shortages within the construction sector and rising costs ,” claims Jarosław Szanajca, the CEO of Dom Development. Murapol, which seems to have benefited from last year's management changes, remains in second place having recorded a minimal, 1 pct decrease in its y-o-y sales (from 3,605 to 3,560 units). “[The changes] went hand in hand with a new approach to doing business, with a new strategy and new investment decisions. Our idea of concentrating all our resources on our core business is generating clear and measurable results,” claims Nikodem Iskra, the CEO of Murapol. In 2018 the sharpest drop encountered by one of the ‘big five’ was seen by Robyg – the number of apartments it sold fell from 3,470 in 2017 to 2520. “The company has good margins, so its sales in 2018 were only 16 pct down on 2017, when we had an excellent year,” says Oscar Kazanelson, Robyg’s chairman of the board. Atal’s sales also dropped by over 13 pct from 2,787 in 2017 to 2,420 units in 2018. “Delays in governmental decisions clearly affected the launch of construction work on new projects. We hope that administrative decisions on the market will be more predictable this year. The price of building materials and labour should also become more stable,” announces Zbigniew Juroszek, the CEO of Atal. LC Corp also saw a precipitous drop with apartment sales down by 15 pct and the company no longer among those with annual sales above 2,000 (1,710 units were sold in 2018 compared to 2,029 in the previous year). Three companies out of the remaining listed developers (Archicom, Lokum Deweloper and Ronson Development) saw single digit percentage falls. Two other companies (Budimex Nieruchomości and Wikana) also saw falls in the 10 to 19 pct range, while Vantage Development saw sales plummet by just over 20 pct. However a large number of company’s saw their sales figures slashed by over 30 pct or worse including (in alphabetical order) Echo Investment, I2 Development (with a massive dive of of 51.2 pct y-o-y), J.W. Construction, Polnord and Soho Development.

Up up up we go!

It wasn’t all doom and gloom, although those who saw their sales actually rise number less than five: CNT (up by 6.4 pct), Inpro (up 8.4 pct), Marvipol Development (up by10.2 pct) and Victoria Dom (with a rise of 31.4 pct). No one’s really going to be cracking open the champagne over the Q4 sales results either – only three companies improved their sales (Budimex Nieruchomości, Marvipol and Victoria Dom) while everyone else except for Dom Development (which fell by 4.1 pct y-o-y) saw double-digit percentage losses with the drops ranging from 13.9 pct to 87.5 pct. Overall the falls across the sector have been increasing from quarter to quarter since the first quarter of 2018 when sales rose by almost 29 pct meaning that the slowdown since then has been around 10 pp per quarter so it’s going to be a nervous wait for the announcement of the Q1 sales results as the numbers will show whether it’s a collapse of the market or just a correction, which residential developers seem to be chanting like a mantra.

[The sales data is taken from company reports and include the number of net development agreements signed (minus cancellations), with the exception being the results of Murapol, which reports the total number of its development and preliminary contracts as well as its paid reservations.] ν