Excitement in the run-up to Christmas

For the stock exchanges around the world, 2023 ended with a flourish due to the growing conviction that the global economy has been picking up while interest rates and returns on government bonds are set to fall. The final week of the last year was marked by the increased faith that such a scenario is likely to play out over the coming quarters, and so the stock exchanges in Europe and America reacted to this by reaching new peaks. Almost all the indexes – from the Dow Jones in the US and the CAC40 in Paris – saw double-digit growth last year, as they enjoyed growth rates from the more modest teens to the rises of over 50 pct recorded by the Nasdaq. But amid the buoyancy of all these trading floors, the only fly in the ointment has turned out to be China, where the country’s stock market ended down on the year.

The Warsaw Stock Exchange proved to be no exception to the growth seen across the world’s bourses. The WIG20 index ended 30 pct up over the year, which together with the leap upwards of almost 40 pct by the WIG, put the WSE among the best-performing exchanges – although the BUX in Budapest actually yielded somewhat higher rates of return. Nonetheless, Warsaw’s growth was not far behind that seen in the stock markets of Japan, Italy and Germany as well as emerging markets like Romania. In terms of the sector sub-indexes, the WIG-Budownictwo indisputably took first place with a rise of over 80 pct, which was largely due to the massive surge in the share price of construction giant Budimex. The WIG-Developer index did slightly worse in comparison, since after hitting its peak in September it saw a slight decline in the last few months of the year despite operating in a booming market.

However, in spite of the boost in demand provided by the introduction of cheap state loans, the residential market is still having to contend with limited supply. And with the change in government, the leaders of the sector have started to complain more vigorously about local authority red tape and the lack of available land. In November, the monthly data revealed double-digit falls in the numbers of construction launches and in the rate of building permits being issued. However, with the sales of stock exchange-listed residential developers having risen over the first three quarters, the record set in 2021 could have been broken by the end of the year – and so it is no wonder that traditional promotions and special Christmas offers for new home purchases have been rather thin on the ground.

December also saw the long-awaited stock exchange debut of Murapol. It was not only the residential development segment that was waiting for this but also the entire stock exchange, as it has been two long years since the last IPO took place on the WSE. Murapol sold 30 pct of its shares to investors – a higher chunk than even it had predicted. Each share was priced at PLN 33, bringing the value of the offer up to PLN 404 mln and also valuing the company at PLN 1.35 bln. However, on the same day as the IPO its share value rose to PLN 37.5. Murapol’s listing is a major event for the sector, since in terms of the numbers of homes sold it is only surpassed by Dom Development, while its revenue over the first three quarters came in at almost PLN 1 bln. The company has been enticing investors by promising a minimum dividend of PLN 200 mln for 2023, which amounts to almost PLN 5 per share, while at the same time the developer has been emphasising that it has regularly demonstrated a very high gross margin on sales (between 37–45 pct over the 2021–2023 period). It is also worth pointing out that Murapol is one of the pioneering developers that have taken a bold plunge into the PRS market.

Echo Investment, which operates the largest institutional rental platform in Poland, has also not been resting on its laurels. It currently has over 4,000 apartments in its portfolio and is set to exceed 10,000 by the end of 2026. Echo has also been considering a major entry into the student accommodation market through introducing a similar system to its PRS platform – and it is already experienced in this segment. The company is currently concentrating on the PRS market as well as on commercial office development, while its residential business in five cities is now in the hands of Archicom, following its takeover by Echo. The group has registered an annual net profit of 20 pct, which is unchanged on the previous year, but its gross sales margin is now more than 40 pct. However, Echo admits that this is exceptional, so we should expect its margins to soon fall to somewhere between 30 pct and 40 pct.

(Mir)